Last month, the US Public Company Accounting Oversight Board (PCAOB) published its "Staff Priorities for 2024 Inspections and Interactions With Audit Committees." Therein, the audit regulator lays out its plans to increase scrutiny of audit firms' cultures in the coming year.
"Audit firms continue to face challenges delivering quality audits as evidenced by (1) the increasing trend of audit deficiencies in recent years and (2) deficiencies identified that have recurred for numerous years," the PCAOB writes. "We are interested in why these deficiency trends are not improving and whether audit firms' cultures are playing a role in this failure to improve."
In this direction, the PCAOB has established a small team to evaluate the culture across the "US Global Network Firms," comprising the Big Four, BDO, and Grant Thornton. "This initiative includes interviewing firm personnel and evaluating other documentation, as deemed necessary, as part of our [quality control] procedures," the regulator writes. The information gathered through these inspections will inform the PCAOB's understanding of firm culture and how it impacts audit quality outcomes. The aggregated results will also be included in a future publication.
Last year, Starling published "Renal Failure: A Crisis in Audit Culture?," a Deeper Dive report into global concerns surrounding audit quality and professional conduct. Therein, we discuss the efforts of regulators, including the PCAOB, to reform audit quality and governance.
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