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January 25, 2023

Audit

RSM US Finally Might Be Taking Audit Quality a Little More Seriously, According to 2021 PCAOB Inspection Report

Based on the 2021 PCAOB inspection reports we’ve reviewed so far, the audit firm that would win the “most improved” award is RSM US. From 2017 to 2020, RSM had an average yearly audit failure rate of 42%, including failing 46% of its audits reviewed by PCAOB inspectors in 2020. But during the most recent […]

Grant Thornton’s 2021 PCAOB Inspection Report Wasn’t Too Bad

Of the six 2021 PCAOB inspection reports released before the holidays, we’ve so far taken a look at five: PwC, Deloitte, EY, KPMG, and BDO USA. The last of the bunch belongs to Grant Thornton. We didn’t save the best for last, but it’s not that bad either. From 2016 until its 2020 inspection report, […]

Thumbs down BDO LLP

BDO USA Botched More Than Half of Its Audits Inspected By the PCAOB In 2021

Fat Joe’s favorite audit firm once again had a spectacularly horrible PCAOB inspection report. In the 2021 inspection of BDO USA, LLP, the PCAOB assessed the firm’s compliance with laws, rules, and professional standards applicable to the audits of public companies. We selected for review 30 audits of issuers with fiscal years generally ending in […]

Believe It Or Not, KPMG Is Helping to Fix the Accountant Shortage Through Its Terrible Audit Work

A little data point for you to feast on as we go forth into the new year: the PCAOB levied record fines of $11 million in 2022, more than $8 million against KPMG alone. 2022 was also the year the PCAOB handed out the largest civil money penalty against an individual in PCAOB history ($150,000). […]

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KPMG Still Rocks at Having the Worst PCAOB Inspection Report Among the Big 4

The last of the 2021 Big 4 PCAOB inspection reports belongs to KPMG, which has had the highest audit deficiency rate of the four firms for six out of the previous seven years—the lone exception being 2019. Make that seven out of the last eight: In the 2021 inspection of KPMG LLP, the PCAOB assessed […]

EY’s Auditing Has Reverted Back to Being Bad, 2021 PCAOB Inspection Report Shows

Next up on the PCAOB’s hit list is EY, whose 2021 inspection report was released on Dec. 19. The Black and Yellow had been slowly but surely not screwing up as many audits in recent years. After having a not-great audit deficient rate of 31% in its 2017 inspection report, EY’s error rate had dropped […]

Deloitte’s Latest PCAOB Inspection Report Is Its Worst Since 2017

Uh-oh, this cant’t make Joe U., Lara Abrash, and other Deloitte audit folks happy (bold part added by us for emphasis): In the 2021 inspection of Deloitte & Touche LLP, the PCAOB assessed the firm’s compliance with laws, rules, and professional standards applicable to the audits of public companies. We selected for review 54 audits […]

PwC’s 2021 PCAOB Inspection Report Shows Once Again It Is Less Awful at Auditing Than the Other Big 4 Firms

The 2021 PCAOB inspection report season kicked off right before Christmas with the release of a batch of six big ones: PwC, Deloitte, EY, KPMG, BDO USA, and Grant Thornton. It would be tough for PwC to top its 2020 inspection report as it was nearly blemish-free. Of the 52 audits reviewed by inspectors during […]

Grant Thornton and Five Other Firms Got Coal in Their Stockings From the PCAOB

The PCAOB added six audit firms—three international, including a KPMG affiliate, and three in the U.S., including Grant Thornton—to its 2022 naughty list on Dec. 22 for not making required disclosures on Form 3. If a PCAOB-registered accounting firm is a defendant or respondent in an administrative or disciplinary proceeding that was initiated by another […]

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Deloitte UK Got a 27.5% Discount on Audit Fines For Admitting They Screwed Up

That sound you hear? It’s KPMG leadership breathing a heavy sigh of relief for not being the name attached to audit failure headlines this week. Our lucky winner today is Deloitte. The Financial Reporting Council has fined Deloitte UK more than £900,000 (a cool $1,081,444 Federal Reserve notes) over its shoddy audit work for building […]

an older man cheating on an exam by spying on answers

Unsurprisingly, Firms Did Not Totally Rat Themselves Out to the UK Audit Regulator About Exam Cheating

Exam cheating has been a hot topic in audit ever since EY got fined a record $100 million over the summer for cheating on ethics exams (ironically), and perhaps even before that when KPMG got caught using confidential information supplied to them by a PCAOB insider to improve the firm’s audit inspections years before. It […]

Bitcoin on Wall St

Mazars and Armanino Just Abruptly Stopped Working For Crypto Clients

Two things to share today. First, Mazars has “paused” crypto work effective immediately. Reports WSJ: Cryptocurrency-trading giant Binance said the accounting firm it uses to reassure customers that their money is safe has paused all of its work for crypto clients, and said the outflows from its platform had swelled to $6 billion. Mazars, a […]

angry cat

PCAOB Chair Williams Reminds Us For the 1,000th Time She Is Sick of Auditors’ Bullsh*t

Another day, another scathing speech from PCAOB Chair Erica Williams. Today it’s from prepared remarks given at the AICPA & CIMA Conference on Current SEC and PCAOB Developments on Monday. First, let’s talk about why she’s mad. On December 8, the PCAOB issued a concerning staff Spotlight report about an increase in the percentage of […]

The PCAOB Is Not Impressed with the Quality of Firms’ 2021 Audits

The PCAOB should be dropping the first batch of 2021 inspection reports soon, and as an appetizer before the main course, the audit cops issued a report Dec. 8 on how the 141 annually and triennially inspected firms did overall during the most recent inspection cycle, in which portions of 690 audits were reviewed. Annnnd […]

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We Forgot to Mention KPMG Got Caught Cheating Again

The PCAOB announced Wednesday it has imposed $7.7 million in penalties against KPMG Colombia (Firm: $4 Million Penalty; Individual: $25,000 Penalty), KPMG UK ($2.6 Million), and KPMG India (Firm: $1 Million Penalty; Individuals: $75,000 Penalty) for a variety of infractions. Failure to cooperate with a PCAOB inspection, cheating on training exams, signing off on blank […]

If There Was a PCAOB In the Metaverse, It Would Probably Find a Bunch of Errors In Prager Metis’s Audits Too

In an article for CoinDesk, Francine McKenna took a crack at why the FTX debacle happened, and like she always does when there’s really bad accounting at a company going through a financial crisis, who are/were the auditors: It’s not clear why FTX commissioned two different audit firms to audit its 2020 and 2021 financial […]

SEC Enforcement Released Its Greatest Hits for FY 2022

The SEC Division of Enforcement cracked a lot of skulls in fiscal 2022, as it brought in a record $6.439 billion in penalties and disgorgement, up from $3.852 billion in fiscal year 2021. Of that total, the $4.194 billion in civil penalties the SEC doled out was also a record, but the $2.245 billion in […]

concept photo of a KPMG auditor searching for material misstatements

Carillion Liquidators Roast KPMG: “A Competent Auditor Would Have Detected the Misstatements”

The Carillion failure is still working its way through the courts and now KPMG is accused by Carillion’s liquidators of missing multiple red flags, the likes of which should not have been missed had KPMG had any clue what it is doing. So say the liquidators. WSJ: KPMG received £29 million from Carillion without qualifying […]

PCAOB Hopes Updating Quality Control Rules Will Maybe Prevent Audit Firms From Constantly Breaking Quality Control Rules

From the earliest days of Going Concern until most recently last month, quality control has been a problematic thing for audit firms. For example, the firm that employed the guy who just got the largest fine the PCAOB has ever given to an individual auditor couldn’t get its quality control systems under control: From 2018 […]

Which Firm Had the Most IPO Audit Clients In Q3 2022?

The initial public offering slump of 2022 continued in the third quarter, as the 39 IPOs that raised a combined $3.1 billion is significant lower than the 199 IPOs in U.S. markets in Q3 2021, which raised a total of $49.7 billion, according to a new analysis from Audit Analytics. The amount raised in Q3 […]

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Supposedly PCAOB China Inspections Went Well, the Environment Was Not Necessarily Considered

People who presumably aren’t paid by the Chinese government to say “everything is great!” have told Reuters that the PCAOB’s trip to Hong Kong to finally inspect Chinese audit work went pretty well. Reuters: U.S. regulators gained “good access” in their review of auditing work done on New York-listed Chinese firms during a seven-week inspection, […]

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Our Audits Sucked Because the Auditors Are Exhausted, Says Deloitte Australia

Last week the Australian Securities and Investments Commission (think Aussie PCAOB) informed us that Deloitte and KPMG need to take “continued deliberate and concerted action” to improve the quality of their audit work because apparently it is just that bad. Deloitte did not meet ASIC standards on half of audits inspected, KPMG came in at […]

a lazy auditor

EY Reminds Us That Audits Provide ‘Reasonable Assurance,’ Not a Guarantee That Billions of Dollars Aren’t Hidden From the Balance Sheet

The NMC Health collapse of 2020 is still haunting EY UK, this time in London High Court as NMC administrators accuse the firm of failing in their duties and not noticing “one of the biggest frauds ever alleged at a FTSE 100 company.” The administrators, whose job it is to find some funds to repay […]

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The Canadian PCAOB Says One Big 4 Firm Keeps Screwing Up Audits But Won’t Say Which One It Is

Shall we speculate wildly which Big 4 firm is not meeting the Canadian Public Accountability Board’s generous standards? The Globe and Mail reports: One of Canada’s Big Four auditing firms continues to have a significant number of problems in its work, the national industry regulator has found. For now, the Canadian Public Accountability Board, which […]

a man writing "I will not alter work papers" on a white board

Audit Partner Really Bad at Auditing Won’t Be Auditing Any Time Soon (Or Ever)

The PCAOB has made it painfully clear that they are done pussyfooting around and sick of auditors not doing their jobs. Chair Erica Williams said in September the Board plans to use every tool at their disposal to bring the hammer down on naughty auditors and it seems that’s exactly what they’re doing. Wanna alter […]

an Ernst & Young umbrella

EY Is Haunted By Some Lingering Independence Problems

Yesterday the PCAOB made public additional portions of EY’s 2018 inspection report “because the firm did not address certain quality control issues to the satisfaction of the Board within the 12 months following the date of the report.” EY’s 2018 PCAOB inspection report is dated April 28, 2020 and in it, the Board said EY […]

a broken piggy bank

When a Bank Fails, People ‘Lose Faith’ in the Auditors

Are bank failures bad PR for the firms that audit them? New research seems to show that depositors — a.k.a. bank customers — find it difficult to trust auditors when those auditors have been associated with a failed bank. Via KU (Kentucky University) News: The word “audit” has a different meaning depending on whether you’re […]

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The PCAOB Has Had It With Shoddy Audit Work Performed by Affiliates

In its ongoing effort to tell audit firms that it means business this time for real, the PCAOB is reminding firms that local affiliates will be held to the same standards as the U.S. firms they are affiliated with. Said PCAOB Chair Erica Williams to the Financial Times: “[Global audit firms] know that we are […]

sad face spray painted on a wall

A Bunch of Auditors at RSM F*cked Up

Today in Auditors Not Doing Their Jobs, the SEC has charged RSM, three senior-level employees who work there, and a couple partners with improper professional conduct for failing to properly audit Revolution Lighting Technologies Inc.’s financial statements over a four-year period when Revolution was violating accounting principles by inflating revenue with bill and hold sales. […]

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The Talent Shortage Has Gotten So Bad Clients Are Now Doing Their Own Audit Documentation

The Securities and Exchange Commission has charged Deloitte China with failing to comply with fundamental U.S. auditing requirements because in numerous audits over numerous years Deloitte China asked clients to select their own samples for testing and to prepare their own audit documentation. From the SEC press release: The Securities and Exchange Commission today charged […]

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Warning to Auditors: The PCAOB Is Coming For Dat Ass

PCAOB Chair Erica Williams had some strong words for guardians of capital markets in remarks she made (virtually) at the Council of Institutional Investors (CII) Fall Conference on September 22: “[T]his Board is approaching enforcement with a renewed vigilance.” She said: As our strategic plan makes clear, this Board is approaching enforcement with a renewed […]

EY stress balls

EY UK Chair Insists Audit Will Not Be the Red-Headed Stepchild of Professional Services if the Split Goes Forward

For years, audit has struggled to attract talent and especially leadership because let’s be honest, audit is awful. You’re clients least favorite person, you have regulators breathing down your neck, and one little mistake can ruin your whole career. Plus the pay is…not great compared to other service lines. EY UK Chair and Managing Partner […]

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SEC Fines Friedman For Piss-Poor Auditing So They Remember to Exercise Professional Skepticism Next Time

Last week the Securities and Exchange Commission charged Friedman LLP with with improper professional conduct for failing to comply with the standards of the Public Company Accounting Oversight Board while conducting audits of two public companies from 2017 through 2020. Friedman has agreed to settle the charges and will pay approximately $1.5 million in total […]

Idiot Who Backdated Work Papers Will Never Work in This Town Again

The PCAOB is busy sniffing out poor audit behavior to remind everyone to be on their game and don’t get caught doing boneheaded things like faking your audit homework because the PCAOB test is tomorrow. Look, the audits don’t have to be perfect. They just have to be performed correctly. Now this guy is permanently […]

Some Folks at EY Spent Labor Day Working Out the Details of the Audit/Consulting Split

The Wall Street Journal is reporting that the EY split is moving forward thanks in part to the big wigs getting together over the holiday weekend to hammer out the plan. Ernst & Young’s leaders are expected this week to give the green light to splitting its auditing and consulting businesses, paving the way for […]

Research: The Profession Continues to Have a Gender Diversity Problem at Upper Levels

Though some progress has been made in recent years, women continue to be suspiciously absent at the highest levels of public accounting. This fact has been amplified by new research published in Journal of Accounting and Public Policy. “Gender equity in public accounting: Evidence from single audit partner and director engagement leaders” examines vertical segregation […]

Here’s the Deck EY Put Together to Sell the Audit/Consulting Split to Staff

Australian Financial Review has published slides shown to EY staff in a July global webcast led by Carmine Di Sibio and in them we learn more about EY’s plan — code-named Project Everest — to split off consulting and audit. First up, the why. “The transformative forces reshaping professional services are evolving at unprecedented speed and […]

A Word on the Persistent Low Morale of the Audit Profession

We received the following email from a distraught and burnt out Big 4 auditor in the Southeast: The level of morale in the [XYZ] office is at an all time low. Discussion with low level staff, through managers, have yielded the same opinion of overwhelming expectations without the needed support from the firm. They want […]

FRC Head Tells Firms to Stop Bitching About Audit Fines and Just Git Gud, Scrubs

FT reports that Financial Reporting Council CEO Sir Jon Thompson has a strong message to firms upset about getting hit with fines for bad auditing: git gud. Accountants should stop complaining about extra scrutiny and fines for audit failures and improve the quality of their work, said the head of the sector’s UK watchdog, which […]

Happy 20th Birthday, Sarbanes-Oxley!

Sarbanes-Oxley was signed into law by President George W. Bush on July 30, 2002.  

The PCAOB Hasn’t Done a Lot With Audit Standards in the Last 20 Years But They’re Getting Around to It Now

From remarks delivered yesterday by PCAOB Chair Erica Y. Williams at a virtual event hosted by Council on Institutional Investors (CII) on the 20th anniversary of Sarbanes-Oxley and the establishment of the PCAOB: When the PCAOB was first getting off the ground in 2003, it adopted existing standards that had been set by the auditing […]

UK Audit Watchdog Says Deloitte Is Doing Some Good Auditing Across the Pond

Deloitte is doing a great job keeping the Financial Reporting Council happy these days. Per the FRC’s recently released 2022 Audit Quality Inspection and Supervision Report, the audit watchdog is pleased with the progress the firm has made and the absence of serious deficiencies: In the 2020/21 public report, we concluded that the firm had […]

EY Is Leaving $10 Billion in Consulting Fees On the Table If It Doesn’t Split, Says Global Chairman Carmine Di Sibio

In comments to Financial Times, EY Global Chairman and CEO Carmine Di Sibio says splitting consulting and audit “would win its consulting division up to $10bn in extra fees by liberating it from conflicts of interest that block partnerships with the world’s largest tech groups.” Those consulting fees are as yet out of EY’s reach […]

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Crisis in the Profession: Interns Aren’t Learning SALY?!?

If true this could shatter the entire financial system! We knew training has suffered due to remote work, spread out teams, and Covid stress over the past few years but not even learning SALY? Don’t want to think what this could do to the audit profession if it spreads. Hopefully this is just an isolated […]

Senior Managers Out of F*cks to Give Are Acting Up in Review Comments

Saw this on Reddit this morning, good thing I grabbed it before it got deleted just like this Sr. Manager’s career. Text of the original post transcribed below: I’m a Manager, a Sr. Manager is leaving me profanity / border line insulting review comments – what to do. First time working with this guy and […]

a young man cheating by looking at his classmate's test answers

FRC Asks Large Audit Firms What They’re Doing About All This Cheating

Financial Times is reporting that across-the-pond regulators at the Financial Reporting Council have written a letter to CEOs at seven audit firms requesting details on how the firm prevents staff from cheating on professional exams. This comes after the SEC fined EY $100 million for cheating on CPE and CPA licensure ethics exams, KPMG’s dual […]

Working 60-70 Hours a Week is ‘Fine’ Says Underpaid Big 4 Auditor Skilled in the Art of Minimizing

Check out this Big 4 auditor recently profiled on eFinancialCareers. Blink twice if you need work-life balance, buddy. I’m an auditor for a Big Four firm. Audit jobs don’t always have a good reputation: they pay less than some other Big Four jobs and offer less chance of making partner. But this is fine because […]

a man with binoculars

Big 4 Conflicts of Interest Are in Regulators’ Crosshairs, EY Tops the Independence Naughty List

There’s a story in the New York Times today about how EY “devised an elaborate arrangement” for nonprescription drugmaker Perrigo to avoid more than $100 million in taxes, an arrangement that was questioned by Perrigo’s then-auditor BDO. Perrigo did what any reasonable tax-avoiding nonprescription drugmaker would do and dropped BDO for EY, hence totally resolving […]

Supply Chain Disruption and Risks Around Remote Work Among PCAOB Inspection Focus For 2022

In a spotlight released by the PCAOB just a few days ago [PDF] the auditors of auditors laid out inspection priorities for 2022, among them increased risk of missing material misstatements (say that 5x fast) due to staff turnover and remote audit work. Oh, and supply chain disruption, the shitty economy, and Rona are also […]

Some Guy in Montana Thinks Audit Firms Are Corrupt, Untrustworthy

Jim Elliott writes an opinion column for the widely-distributed Missoula Current (that’s a joke) and in today’s column he decided to address the EY cheating scandal. His familiarity with the ethics exam EY auditors cheated on begins and ends with a quick Google search but as an outsider to accounting and a member of the […]

large dollar signs in a field

Big 4 Firms Are Fighting Engineers Over the Right to Bill Clients For Climate Disclosure Audits

Interesting piece over at the Wall Street Journal this morning about environmental disclosures or, more significantly, who gets to charge clients for auditing this data under SEC climate disclosure rules proposed in March. Read: Firms that verify businesses’ climate data are at odds over who is qualified to perform the work, a pivotal and potentially […]

EY Auditors Cheated on Ethics Exams and Tried to Cover It Up, Will Pay a Record Fine for Naughtiness

Well this is bad. The SEC has fined EY a record $100 million after an investigation revealed auditors at EY were cheating on ethics exams (open book ethics exams we presume) and CPE; worse than cheating alone, they actively tried to cover it up and hide the cheating from the SEC. From the SEC news […]

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Audit Supervisors at the PCAOB Want Auditors to Better Supervise Their Auditors

The PCAOB adopted a new audit standard yesterday (AS 1206, Dividing Responsibility for the Audit With Another Accounting Firm) to ensure that lead auditors are properly supervising the outside auditors they use. From the PCAOB: The Public Company Accounting Oversight Board (PCAOB) today adopted amendments to its auditing standards [PDF] to strengthen requirements that apply […]

EY Puts Its Money Where Its Mouth Is on Audit Quality With a Technology Investment

EY announced today it is making a $1 billion investment in audit technology just weeks after WSJ reported that the firm is in the process of splitting its audit and consulting arms. $13.6 billion of EY’s $40 billion global revenue last year came from audit. From EY: EY today announces an investment of more than […]

a hand making a thumbs down motion

SEC Slaps CohnReznick and Three Partners with Improper Professional Conduct

This press release from the SEC is wayyyy too boring to be rewritten in an interesting way on a sunny Friday afternoon so have some copy paste instead: The Securities and Exchange Commission today charged audit firm CohnReznick LLP with improper professional conduct on engagements for two clients in 2017. The two clients, Sequential Brands […]

The Audit Profession’s Inability to Retain Talent Poses a Serious Threat to Audit Quality

Just about every employer in corporate America is singing the blues about talent shortages caused by the Great Reset and the Great Resignation. However, these effects are not being felt uniformly across all businesses. Those employers with a history of mismanaging their human capital, like the largest audit firms, are being hit the hardest. The […]

The PCAOB Ain’t Messing Around No More

After getting rid of the boil on its butt (that boil being ex-chairman William Duhnke) last June, the PCAOB seems to be feeling pretty good now under the leadership of Erica Williams. And that’s bad news for audit firms. The PCAOB has created new ways of disciplining audit firms and auditors who bend the rules, […]

Thumbs down BDO LLP

BDO USA Is Finally Trying to Do Something to Improve Its Horrible Audit Quality

While PCAOB inspection reports are only one indicator of how good or bad a public accounting firm’s audit quality is, it’s still pretty embarrassing when a firm gets a bad report card. Consecutive years of horrible inspection reports (2013 and 2014) is what drove KPMG executives to hatch a scheme to steal confidential audit inspection […]

6 Rules of Audit Room Etiquette

As workers return to the office, many auditors find themselves visiting client sites for the first time. Given the two-year in-person hiatus we’ve all just been through, even first-year seniors don’t know how to approach audit room protocols. So here are some key rules you should follow in the audit room whenever you do go […]

In the Trenches: My Three Least Favorite Audit Rooms

Audit rooms come in all shapes and sizes—usually small, often windowless, sometimes with chairs you can actually sit on, and almost always as far away from the finance/accounting department as possible. After eight years in public accounting, I have loads of unforgettable audit room experiences. Here are just a few. The hostile work environment This […]

Are Auditors Becoming as Hard to Find as a PS5?

Alternate title: If You Are an Accounting Student, Expect to End Up In Audit When You Graduate Ever since early 2020 we have been forced to learn how to go without, not always an easy task in our always-connected, on-demand, two-day-delivery world. I don’t know about you but if I have to wait longer than […]

How Did Crowe, Moss Adams, and Marcum Do In Their Respective 2020 PCAOB Inspection Reports?

If these inspection reports were like tests taken in a classroom, Crowe and Moss Adams would have received passing grades, while Marcum would have failed big time. Let’s take a look: Crowe The latest audit inspection results for Crowe show the 11th-ranked public accounting firm by revenue bombed 27% of the audits reviewed in the […]

Arthur Andersen & Co.

Study: Ex-Arthur Andersen Audit Partners Do Not Deserve to Get Shredded

When you hear the name Arthur Andersen, the first thing that usually comes to mind is … well … you know. But here’s some good news associated with the Andersen name: audit partners who worked at Arthur Andersen during its collapse and who currently work in the Big 4 provide higher-quality audits than audit partners […]

Auditing Struggle Bus Makes a Stop Once Again At RSM US, Latest PCAOB Inspection Report Reveals

When the PCAOB released its first batch of COVID-era inspection reports at the beginning of last November, everyone’s favorite audit cops started off with a bang. That group of 2020 inspection reports included six of the top seven largest public accounting firms in the US: Deloitte, PwC, EY, KPMG, BDO USA, and Grant Thornton. Missing? […]

Audit Firms Are Making More Money Than Ever But Their Auditing Still Sucks, Says Guy

For today’s episode of “What Can We Rag on Big 4 Firms For” we’re going to dive into this article I came across this morning in Fair Observer, an independent outlet which I’ve never heard of but hey, any article that bashes Big 4 firms is OK in my book. Let’s be real, visiting Going […]

Happy Busy Season to All Who Celebrate

Happy first Monday of 2022! But let’s be real—nobody’s happy about being back at work today after the holiday break, especially auditors, who are embarking on another (or maybe their first) busy season. Busy season number 9. Let’s get it #DebitsEqualCredits #EBITDA pic.twitter.com/7FFTK8tcTD — Cory Callaghan (@corycallaghan) January 3, 2022 https://twitter.com/LiviaStrandberg/status/1477867111275921409 Not ready for busy […]

How Many Non-Auditors are Getting Pulled Off the Bench to Do Inventory Counts This Year?

Hello and Happy post-Christmas Monday, everyone. Quick show of hands (let’s just pretend I can see them through the screen OK?), how many of you NOT in audit have been pulled off the bench to do inventory counts this week? We’re hearing some grumblings of tax people being thrown into the gauntlet and thought it […]

With Omicron Threatening to Send Everyone Back Inside, KPMG UK Reminds Audit Staff to Get Back to the Office

Alright so we’re sourcing this one from Reddit which, yeah, I know but since the bulk of our sources are on this side of the pond, it’s the best place to find international Big 4 news other than obscure local papers or from unmemorable African newspapers. A screenshot of an email sent out by KPMG […]

PwC Might Do Something No Other Big 4 Firm Has Ever Done Before

After years and years of PCAOB inspections of the Big 4 in which the percentage of audits of public companies that weren’t up to snuff have been in the 30s, 40s, and even 50s, we finally had a respectable audit report card earlier this year when Deloitte nearly had a single-digit deficiency rate in its […]

Audit Market Caps In the UK: The Financial Times Fails a Math Test

“The Glacial Pace of Audit Reform Needs To Speed Up” The Financial Times might wish to reconsider this headline, above its editorial of late last week. Global climate change considered, the metaphor may be more apt than intended, as the likely fate of the world’s glaciers is their tragic and accelerating collapse into muddy puddles amid massive fields […]

KPMG UK Got Absolutely Dragged By the FRC For Its ‘Unacceptable’ Bank Audits

The Financial Reporting Council (FRC) released its 2021 inspection reports today, which include BDO, Deloitte, EY, Grant Thornton, KPMG, Mazars, and PwC. I’ve linked the individual reports for each firm (note they are in PDF) should you feel like wasting a Friday afternoon reading overseas audit inspection reports but we need to talk about the […]

Which Firm Was the Biggest Loser In the First Auditor Shuffle of 2021?

[Updated with corrected version of net audit fees won table from Audit Analytics.] With the first quarter of 2021 already in the books, it’s time once again to look at the winners and losers among the top 12 global and national accounting firms that participated in the first round of auditor musical chairs for 2021. […]

Audit ‘Reform’ in the UK: Hello … Is Anybody There?

It’s one thing to discuss the breadth of the UK government’s March 18 consultation paper, “Restoring Trust in Audit and Corporate Governance,” with its 98 questions spread over 232 pages, as I did recently in a conference mixing academics and practitioners. It’s quite another, and thoroughly dispiriting, to observe the public silence on the likelihood […]

Audit ‘Reform’ In the UK: The Government Finally Speaks, and Says Little

On March 18, the UK government weighed in with its long-promised consultation paper (the “Consultation), “Restoring Trust in Audit and Corporate Governance.” Ninety-eight questions, spread over 232 pages, contain much that is cautious and little that is innovative. The problem is, what is cautious would not innovate, and what would innovate is not cautious. For another day, […]

Important Audit Professional Takeaways from Botta v. PwC Closing Arguments

Closing arguments were held on April 13 in the bench trial of audit whistleblower Mauro Botta vs. PricewaterhouseCoopers. Botta, a former PwC senior manager, claims that he was wrongfully terminated by PwC in retaliation for making a whistleblower report to the SEC. Botta’s whistleblower report alleges that PwC had compromised its independence by acquiescing to […]

PwC Tried to Recruit a Former Auditor Who Is Suing Them So Don’t Ever Sweat Burning Bridges Again

When it comes time to think about leaving public accounting, which happens for 99% of public accountants except for those brave and oddly-programmed individuals who are cut out for the partner track, one of the foremost considerations in any exasperated public accountant’s mind is: how can I do this without burning bridges? From the time […]

Tweet of the Day: Ex-Crazy Eddie CFO Explains Why ‘Audits Are a Myth’

Our favorite convicted felon and career advice-giver, Sam Antar, the former CFO of Crazy Eddie, had some things to say on Twitter about the current state of audits in a reply to a tweet from Francine McKenna about EY and the Wirecard accounting scandal: I’m going to make this plain and simple:•Audits are a myth.•It […]

The Big 4 Could Use Some Auditing Lessons From Cohen & Co.

If Cleveland-based public accounting firm Cohen & Co. were an English Premier League goalkeeper, the firm would have gotten a clean sheet. Or if you’re not a fan of European soccer but like the NHL, Cohen & Co. would be like a goalie who finished the game with a shutout. In its 2019 PCAOB inspection […]

Talent-Strapped PwC Is That Desperate Ex Texting You With ‘WYD’ After You’ve Moved On

Leaving public accounting is rarely an easy decision, even when the choices are “stay or have a crippling nervous breakdown.” It’s not that the decision itself is hard, rather the consequences of taking an oftentimes necessary leap can lead to difficulties in securing subsequent employment if, as your accounting professors would have you believe, walking […]

Grant Thornton Auditors Are Just Showing Off Now

It’s fair to say Grant Thornton auditors are no longer on the struggle bus. From 2010 to 2015, the Purple Rose of Chicago had an average audit failure rate of 44% in its PCAOB inspection reports during that time frame, including a whopping 65% worth of screw-ups in the firm’s 2012 report, which gave GT […]

New SOX In the U.K.? It’s (Probably) Coming Soon

The February gloom was broken recently by the news that the British government will be introducing reforms targeting company financial reporting and audit oversight. In truth, none of this should be a surprise. There have been several accounting scandals in recent years where the directors of various companies have been unscrupulous and their external auditors […]

Thumbs down BDO LLP

Those Who Know, Know BDO … Is Consistently Terrible At Auditing

Here’s a number of the day for ya: 50.7%. That is the average failure rate of BDO USA audits in PCAOB inspection reports from 2010 to its most recent 2019 report, in which PCAOB inspectors found significant errors in 42% of audits reviewed. Public accounting firms that have been historically bad at auditing, like Grant […]

How Did RSM US Fare On Its Latest Auditing Report Card From the PCAOB?

Not too long ago, RSM US had one of the worst PCAOB inspection reports we’ve ever seen. How bad was RSM’s audit quality? R-E-A-L bad. The number in the red is … well … not a good number. That would be the number of audits the PCAOB inspected that had problems so big that the […]

KPMG Rocks signs held by a woman in a KPMG shirt

LOL, PwC: For Once, KPMG Doesn’t Have the Worst Audit Failure Rate Among the Big 4

Because it’s #TriviaTuesday, here are a couple of questions regarding PCAOB inspection reports: When was the last time KPMG did not have the worst audit deficiency rate among the Big 4? When was the last time KPMG had a lower deficiency rate than PwC? The answer to the first question is 2013’s inspection reports, when […]

Which Firm Was the Biggest Loser In the Last Auditor Shuffle of 2020?

The fourth quarter of 2020 had some new winners and losers in the game of auditor musical chairs, as there were 16 new engagements and 41 client departures among the 12 major global and national audit firms between Oct. 1 and Dec. 31, according to Audit Analytics. Of the top 12 firms, Deloitte gained the […]

The Truth About Public Accounting, Part II: PCAOB Inspection Hysteria — How to Fix It

While there is a consensus that the PCAOB’s existence has improved audit quality, it is also clear that the PCAOB has contributed an unhealthy level of hysteria to the auditing profession. That hysteria has led some professionals to make horrible choices (as seen in the KPMG inspection selection leak scandal). That hysteria has also driven […]

Deloitte Is Doing a Much Better Job Lately of Not Screwing Up Audits

While PwC waits with bated breath for the PCAOB to release the firm’s 2020 inspection report so it can presumably take an audit quality victory lap around the other Big 4 firms, Deloitte can at least say it has had the lowest audit failure rates among the Big 4 the past three years. For the […]

For Now, PwC’s Audit Quality Stinks

In Footnotes last Friday, we highlighted a recent Accounting Today article about PwC finally taking audit quality seriously what measures PwC is taking to improve audit quality. In the article, Wes Bricker, PwC’s U.S. assurance leader and former SEC chief accountant, dropped a bomb—a Bricker bomb, if you will—about the most recent PCAOB inspections cycle: […]

How Are Auditors Handling the Start of Busy Season?

How’s everyone surviving their first Monday of the new year so far? Today is a double whammy for our auditor friends. Not only is it the first official workday of 2021 after holiday break but it’s also the start of the grueling marathon that is busy season. I went on Twitter to see how auditors […]

Grant Thornton Cuts Ties With Pornhub After Everyone Realizes Pornhub Is Full of Abuse and Illegal Porn

So I was gaming with the boys the other day and my buddy asked the squad if we’d seen the stuff about Pornhub. What stuff about Pornhub, you ask? I have to admit that Pornhub isn’t among my multitude of Google alerts (PwC? Yes. Porn? Not so much), therefore as with many things my teammate […]

Boo-hoo: A Certain U.K. Online Fashion Retailer Might Have a Hard Time Finding a New Auditor (UPDATE)

[Updated on Dec. 21 with additional information.] Something called PKF Littlejohn will replace PwC as auditor of scandal-ridden U.K. online fashion retailer Boohoo. The Guardian reported earlier today: The online fashion retailer Boohoo has hired a new auditor after the resignation of the “big four” accountancy firm PwC amid accusations that workers’ health and rights had […]

Number of the Day: $868,000

That’s how much Canadian companies paid on average in audit fees in 2019, up from $621,000 in 2018, according to a post by our friends at Canadian Accountant, citing research from Audit Analytics: “Since 2007, the average amount of audit fees per Canadian company has continued to increase each year, with the largest increase coming […]

Three Former KPMG Partners Charged by SEC For Being Dirty, Dirty Cheaters

Just when KPMG thought maybe everyone had forgotten about that whole cheating scandal debacle, the SEC announced Monday it settled charges with three more dirty cheaters who once called the firm home. The Securities and Exchange Commission today announced settled charges against three former KPMG LLP audit partners for improperly sharing answers to internal training exams […]

Rumor of the Day: Some KPMG Auditors Are Getting a Break From Clients Because of Coronavirus Panic

So, some audit clients have allegedly told KPMG auditors not to come to their offices because of coronavirus concerns, according to a post on Fishbowl. We don’t know if these KPMG audit clients legitimately have COVID-19 concerns or, as one Fishbowl poster says, they just want the auditors off their backs for a bit. Anyway, […]

Busy Season Problems: Quick Client Questions, Annoying Train Whistles, Autocorrect Fails

Got a busy season problem? Don’t be shy. Email us at [email protected] with “Busy Season Problems” in the subject line. Or you can text us at (202) 505-8885. It’s been exactly one month since tax season 2020 began. So let’s check in and see how busy season is treating our friends in tax so far: […]

Which Audit Firm Got Fired the Most In Q4 2019?

It wasn’t a stellar fourth quarter of 2019 for the Big 4 in terms of winning new public company audit clients, according to Accounting Today’s most recent report on the newest data crunched by Audit Analytics. Deloitte and EY brought on four and three new SEC-registered audit clients, respectively, in Q4, but Deloitte also lost […]

Clients Have Absolutely Had It With You Having the Nerve to Skip Lunch

There truly is no limit to the things clients will get pissed about. At least one of them is out here getting mad because his auditors clearly want to spend as little time as possible on this engagement and get the hell out of there. Auditors Skipping Lunch from r/Accounting OP sounds mad af, I […]

Who’s Ready to Count Some Inventory?

When I was going to community college, I worked at Sports Authority. And each year around this time, there was one day when we had to work all night after closing and well into the following morning doing inventory counts. Fishing lures, ammunition, tents, sleeping bags, wiffle balls, shoes, hockey sticks—you name it, we had […]

‘Big R’ Restatements Are Quite the Thing For PwC Audit Clients

All the Tesla haters are having a field day with this on Twitter. The Wall Street Journal reported today: [PwC] has had a streak of accounting problems surface recently at U.S. companies it audits, including an uptick in high-profile restatements. Its clients account for three of the five biggest restatements so far this year, measured […]

Critical Audit Matters: The Games Are On

As a guest here recently I took a look at the accumulating experience with extended auditors’ reports—the additional paragraphs that under international standards describe key audit matters (aka critical audit matters under the Public Company Accounting Oversight Board’s standards in the United States). There I noted a major gap—nobody has yet asked whether investors actually […]