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February 3, 2023

PCAOB

Turns Out Cohen & Company Auditors Are Human After All

Breaking news: Cohen & Company made a mistake on one of its audits inspected by the PCAOB. Big deal, you’re probably thinking, audit firms screw up all the time—some more than others. (We’re looking at you, BDO USA.) But Cohen & Company had perfect auditing report cards from the PCAOB for 2018, 2019, and 2020. […]

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). […]

KPMG Rocks signs held by a woman in a KPMG shirt

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 […]

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 […]

man peeking at his coworker's laptop

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 […]

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Waste, Inefficiency, and Egregious Spending Abound at the PCAOB, Says Employee

Ed. note: We received the below letter from an anonymous PCAOB employee who is trying to blow the whistle on what they perceive to be excessive waste and inefficiency at the audit regulator, the gory details of which are described thoroughly in the letter. It has not been edited and is published here on the […]

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 […]

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 […]

The PCAOB Thinks It Deserves a 12.6% Raise

These days everyone wants a raise that is at least as high as the rate of inflation, which is currently 7.75%. The PCAOB does too. At an open meeting held today [Nov. 18], the Public Company Accounting Oversight Board approved its fiscal year 2023 budget and 2022-2026 strategic plan. […] The 2023 budget is guided by the […]

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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, […]

man hiding in shame under a laptop

ICYMI: KPMG Screwed Up

Didn’t see this press release when it came out last week and because we delight in taking every opportunity possible to point out how objectively terrible KPMG is we’re sharing it with you now. Via the PCAOB: The Public Company Accounting Oversight Board (PCAOB) today announced settled disciplinary orders sanctioning three audit firms for failing […]

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 […]

screengrab from the movie Network

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 […]

some danger tape

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 […]

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 […]

Even KPMG in South Africa Could Not Escape the Clutches of PCAOB Enforcement

Earlier today the PCAOB gave KPMG of the South African variety a slap on the wrist and punished a couple of partners for the firm collaborating with an outside accounting firm not registered with the PCAOB on three years’ worth of audits of a public company. That non-registered accounting firm was KPMG Zimbabwe. And these […]

The PCAOB Has a New Five-Year Strategic Plan For You Guys to Critique

Nearly three weeks after getting reamed out publicly by SEC Chair Gary Gensler for being way too slow to update auditing standards that had been in effect BEFORE the PCAOB was created by the Sarbanes-Oxley Act, everyone’s favorite audit regulator released a draft of its five-year strategic plan, which includes four goals they hope to accomplish from […]

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 […]

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 […]

xzibit yo dawg meme

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 […]

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, […]

Citrin Cooperman Got Sent to Their Room By the PCAOB For Broker-Dealer Audit Screw-Ups

After doing a quick Google search, it looks like the PCAOB hasn’t punished a public accounting firm for failures in its audits of brokers and dealers since 2016. But top 25 firm Citrin Cooperman broke that drought yesterday after being fined $200,000 by a disappointed PCAOB for violating standards related to broker-dealer audits. And three […]

Better Late Than Never: PCAOB Fines Ex-KPMG Vice Chair of Audit Scott Marcello $100,000 In Connection With Inspection Scandal

It only took five years, but Scott Marcello finally received some sort of punishment for what happened in KPMG’s audit practice several years ago as partners were working with PCAOB insiders to illegally receive advanced notice of the PCAOB’s inspection plans for KPMG audits. Marcello, KPMG’s former vice chair of audit, was fined $100,000 today […]

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 […]

SEC and PCAOB Enforcers Took An Extended Smoke Break In 2021

People who work in the enforcement divisions at the SEC and the PCAOB must have been busy doing other things than monitoring the gatekeepers of the capital markets last year, as accounting and auditing enforcement activity decreased and monetary settlements fell sharply, according to a recently released report from Cornerstone Research. The two regulators made […]

PwC Canada Is the Latest Big 4 Firm to Get Busted By Regulators For Employees Cheating on Internal Training Courses

Ever since KPMG was fined $50 million by the SEC in June 2019 as a result of auditors at all levels cheating on internal online training exams by illegally sharing answers with colleagues and manipulating test results (as well as that whole KPMG audit partners stealing confidential inspection information from the PCAOB thing), we have […]

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? […]

Thumbs down BDO LLP

BDO USA’s Auditing Is Still Ass, According to 2020 PCAOB Inspection Report

When the PCAOB gave a preview of its first batch of COVID-era inspection reports for annually inspected public accounting firms in October, the audit cops said: For the majority of the annually inspected audit firms, we identified fewer findings in 2020 compared to our 2019 inspections. Notice how the PCAOB used the word “majority” and […]

PCAOB Inspection Report Day Is No Longer An Embarrassment For Grant Thornton

Once the laughingstock of the firms annually inspected by the PCAOB (and of us at Going Concern HQ), Grant Thornton has recently shown it has really gotten the hang of this thing called auditing. It really is a surprising turnaround for a firm that had epically bad PCAOB inspection reports for 2011 (43% deficiency rate), […]

Here’s What It Would Be Like If the New PCAOB Members Were Introduced At a Basketball Game

And now … your NEW starting lineup for the Peeee Ceeee Aaaay Ooooh Beeee! From Edinboro University, she has 28 years of experience in public finance, policy development, accounting and auditing, disclosure modernization, data analytics, and technology innovation. A former Deloitter, she has held senior financial roles at the Treasury Department and the University of […]

You Know the World Is Getting Back to Normal When KPMG Has the Worst PCAOB Inspection Report of the Big 4

When the PCAOB released its first batch of 2019 inspection reports earlier this year, there was one outcome that left us at Going Concern HQ feeling like we were living in some auditing bizarro world: PwC had a worse audit failure rate (30%) than KPMG (29%). It’s rare when KPMG doesn’t have the worst PCAOB […]

ey orlando

EY Pats Itself On the Back For Not Blowing As Many Audits As Before

Last month the PCAOB teased the results of its 2020 inspection reports by saying audit firms were getting better at not being awful at auditing. From the PCAOB’s Staff Update and Preview of 2020 Inspection Observations: For the majority of the annually inspected audit firms, we identified fewer findings in 2020 compared to our 2019 […]

Deloitte Came Oh So Close to Having a Historically Low Audit Deficiency Rate

If it was any other year, champions of audit quality would be throwing Deloitte a ticker-tape parade for only having two glaring errors out of 53 audits inspected in the firm’s newly released 2020 PCAOB inspection report. But it was PwC auditors who were the ones pulling ticker-tape out of their hair while Deloitte was […]

Deloitte Canada Fined $350,000 By the PCAOB For Fudging Audit Workpapers

Someone lit a fire under the asses of those who work in the PCAOB enforcement division because they issued seven disciplinary orders to audit firms and accountants from Sept. 22 to Sept. 30. One of those firms was Deloitte Canada. Compliance Week reported: The Public Company Accounting Oversight Board (PCAOB) on Wednesday [Sept. 29] imposed […]

There’s a Coup Going Down as We Speak at the PCAOB

Here’s a nice little Friday news dump for y’all to hand-wring over as we head into the weekend: Securities and Exchange Commission Chairman Gary Gensler has fired the U.S.’s top accounting regulator, a move that is certain to please investor advocates and progressives who had demanded an overhaul of the watchdog. The SEC announced the […]

In Response to Discrimination Claims From Ex-Senior Officer, PCAOB Went on a ‘Deny’ Spree

The PCAOB emphatically denied the allegations made by its former chief administration officer Sue Lee who claimed in a wrongful termination lawsuit that she was the victim of a “xenophobic and racist campaign” against her by Chairman William Duhnke because of her Asian ethnicity. How emphatically did the PCAOB deny Lee’s discrimination accusations? The U.S.’s […]

Lawsuit: PCAOB Chairman (Allegedly) Calling Coronavirus the ‘Kung Flu’ Didn’t Sit Too Well with Senior Staffer Born In China

This seems like ages ago but back in October 2019, the Wall Street Journal revealed what was written in a one-page whistleblower complaint—written by a group of current and former PCAOB employees—that alleged some serious problems going on at the PCAOB under chairman William Duhnke, a Republican who was appointed to that role in December […]

The Truth About Public Accounting, Part III: The ‘A’ In PCAOB Stands For ‘Accounting’

An article titled “PCAOB Inspections: Public Accounting Firms on Trial” describes the results from an academic study and survey about the effects on auditors who have been subject to PCAOB inspections. One of many good observations from that academic study is repeated below: Respondents collectively perceive that audit quality has improved as a result of […]

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 […]

Here Are Two Contenders For the Biggest Turd of a 2019 PCAOB Inspection Report

Significantly screwing up half of your audits inspected by the PCAOB won’t get your firm included in the pantheon of worst PCAOB inspection reports of all time. RSM US beat that handily in 2017. BDO USA has had audit failure rates of 74% (2014), 67% (2016), and 65% (2013). Grant Thornton did a horrible job […]

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 […]

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 […]

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: […]

FASB and PCAOB Do a Poor Job on Diversity and Inclusion

I’ve spent a good portion of my career monitoring the accounting and auditing standard-setting world and Big 4 firms. So, I read with great interest the letter to the editor to Going Concern on whether the Big 4’s equity, diversity, and inclusion (EDI) efforts are corporate BS. It made me think about the FASB and […]

Last Indicted Ex-KPMG Partner to Be Sentenced In PCAOB Scandal Won’t Be Going to Prison

Almost three years after being indicted for his involvement in one of the biggest ethics debacles in public accounting history, former KPMG partner Thomas Whittle was sentenced today to two years of supervised release. And that’s all, folks. The six accountants who were charged with fraud and conspiracy by the feds on Jan. 22, 2018, […]

No Jail Time For Another One of the ‘KPMG 5’ Indicted In PCAOB Scandal

When former KPMG partner Thomas Whittle goes before U.S. District Court Judge J. Paul Oetken to hear his sentencing, scheduled for Dec. 2, he will be the last of the five ex-KPMG executives who were indicted in January 2018 for their roles in a scheme to steal confidential audit inspection information from the PCAOB to […]

Grant Thornton’s Streak of Not Being Fined By the PCAOB Has Come to an End

It had been nearly three years since Grant Thornton ran afoul of PCAOB auditing rules and got caught—on Dec. 20, 2017, the Purple Rose of Chicago agreed to pay a $1.5 million penalty to the PCAOB for quality control violations and audit failures as a result of its shoddy auditing work for Bancorp. But GT’s […]

FYI: One of the ‘KPMG 5’ Is Scheduled to Be Sentenced on Oct. 9 (UPDATE)

[Article updated with new sentencing date.] A Manhattan federal court judge will decide next month whether former KPMG executive David Britt should spend some time inside a jail cell for his involvement in a scheme to steal secret audit inspection information from the PCAOB. But if Britt, former co-leader of KPMG’s Banking and Capital Markets […]

Ex-PwC Senior Manager Got Busted for Trying to Pull a Fast One on PCAOB Inspectors

If you try to do something to outsmart PCAOB inspectors, more often than not you’ll end up looking like the big dummy. Case in point, former PwC senior manager Ryan Collins, who was barred by the U.S. audit cops on July 21 for altering workpapers. Collins, who worked at P. Dubs from September 2010 until […]

Deloitte’s 2018 PCAOB Inspection Report Shows They’ve Gotten a Lot Better At This Thing Called Auditing

So the PCAOB did a thing today. Everyone’s favorite audit regulator released the 2018 inspection reports for the Big 4, Grant Thornton, and BDO USA this morning in a “new user-friendly format.” And they’re actually pretty sleek-looking and informative. A couple years ago, Caleb called PCAOB inspection reports “beach reads” because executive summaries had been […]

Is Trump’s Latest Executive Order Another Sign of a PCAOB-less Future?

On May 19, President Trump issued Executive Order on Regulatory Relief to Support Economic Recovery, directing federal agencies to address coronavirus-related economic emergency “by rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery, consistent with applicable law and with protection of the public health and safety, with national […]

So What If the SEC Swallowed the PCAOB?

Skepticism is called for in reaction to the budget proposal to roll up the U.S. audit regulator, the Public Company Accounting Oversight Board, into the Securities and Exchange Commission, its statutory overseer. Do not mistake this reluctance to join the anxieties voiced by the usual suspects—among them former SEC chairman Arthur Levitt and former PCAOB chairman Jim […]

Even the PCAOB Is Now Hunkering Down at Home

This was just emailed to us by the PCAOB and has since been posted to its website. In case you haven’t heard yet, the PCAOB is going the mandatory work-from-home route too, effective immediately. The message says: The Public Company Accounting Oversight Board (PCAOB) is providing the following update on our current operations in light […]

Unsurprisingly, James Doty Is Not a Fan of the PCAOB Possibly Being Folded Into the SEC

The former PCAOB czar joins a group of people that includes ex-SEC chairman Arthur Levitt, former PCAOB interim chairman Dan Goelzer, and others who say the Trump administration’s 2021 budget proposal to consolidate the duties of the audit regulator under the SEC starting in 2022 would be a big mistake. In a blog that was […]

Whistleblowers Would Like the House Financial Services Committee to Have Speaks About the PCAOB

While all this talk has been going on about the uncertain future of the PCAOB, a letter was sent on Feb. 10 to the chairs and ranking members of the House Financial Services Committee and the House Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, asking that a hearing be called for lawmakers to discuss […]

Let’s See What Some Folks Are Saying About the Proposal to Fold the PCAOB Into the SEC

Since we posted our take last week about the Trump administration’s fiscal year 2021 budget proposal to eliminate the PCAOB and fold its duties into the SEC by 2022, we’ve gotten some emails from accountants about what they think of the PCAOB. Most of them have been negative, like this one: Reducing or better yet, […]

Could We Soon Be Living In a PCAOB-less World?

I cut out of the office early yesterday afternoon to watch my oldest daughter’s junior high basketball game, thinking: “It’s a slow news day, I’m not missing out on anything.” It wasn’t until I had my first cup of coffee this morning that I saw a couple of articles posted yesterday afternoon, including one from […]

SEC Takes Away Privileges From Another Felon In KPMG/PCAOB Scandal

David Middendorf’s trial buddy, Jeffrey Wada, the now-former PCAOB inspections leader who fed confidential information about upcoming audit inspections to some folks at KPMG, including Middendorf, in the hopes of landing a job at the Big 4 firm, is now prohibited from appearing or practicing before the Securities and Exchange Commission as an accountant. Wada’s […]

Convicted Ex-KPMG Partner David Middendorf Suspended By the SEC

Another “KPMG 5” executive who will be serving prison time for his role in a scheme to steal confidential audit inspection lists from the PCAOB was suspended today from appearing or practicing before the Securities and Exchange Commission as an accountant. The SEC released the following two-page order of suspension against David Middendorf, former national […]

The PCAOB Is Really Making an End-of-Year Push to Get Stuff Done, You Guys

I dunno about you guys but for most of my working life, I’ve been conditioned to start checking out some time in mid-November. There’s the usual scramble around, oh, October to “tie up loose ends” and then everything from there is a drunken stumble to the new year. Obviously this timeline doesn’t work if you’re […]

PwC and BDO Hong Kong Affiliates Got Their Hands Slapped by the PCAOB

As we begin to take a look back at the year that was 2019, one of the weird things public accounting firms were disciplined for this year by the PCAOB was for not disclosing that they’ve been the focus of a non-PCAOB disciplinary hearing. According to PCAOB Rule 2203, if a firm is a defendant […]

Jailed Ex-KPMG Executive Director Barred By the SEC Because Why Not?

Cynthia Holder, one of the “KPMG 5” who was sentenced to eight months in federal prison in August for her role in a scheme to steal confidential audit inspection information from the PCAOB, was “denied the privilege” of appearing or practicing before the SEC as an accountant, the commission announced on Nov. 29. The SEC […]

Uh-Oh, PwC, You’ve Gotten the Attention of the PCAOB

Somebody at the PCAOB must have read the Wall Street Journal article last week about Mattel and its auditor PwC allegedly burying an accounting error tied to Mattel’s ownership of Thomas & Friends because everyone’s favorite mess of an audit regulator is reviewing PwC’s work, according to Bloomberg, and probably whether the firm broke any […]

Memo to Audit Firms: Altering Workpapers Is Still Frowned Upon

Amid all the drama and turmoil going on at the PCAOB right now, one thing hasn’t changed: PCAOB inspectors really love busting auditors for improperly altering workpapers. Eight auditors—two at Deloitte Korea and six at BDO Mexico—found this out the hard way recently. Because these auditors ignored the memo that altering audit workpapers is never […]

OMG, the PCAOB Is Actually Holding an Open Meeting!

I hope everyone at the PCAOB remembers what to do during an open meeting. It’s been a while. The Public Company Accounting Oversight Board will hold an open meeting on Tuesday, November 19, at 10 a.m. ET, to consider the adoption of the PCAOB budget for the 2020 fiscal year and the 2019-2023 strategic plan. […]

This Halloween Costume Is Here to Haunt the PCAOB’s Dreams

Happy Halloween, everyone! Apologies if you do actually work for @KPMG, but you're this year's #halloween costume #companyhorror pic.twitter.com/B4N09PCs7W — 𝕯! (@darrynvdwalt) October 28, 2017

Senators to SEC Chair Jay Clayton: What the Hell Is Going On At the PCAOB?

It seems we weren’t the only ones who were disturbed by the Wall Street Journal article last week detailing the dysfunction at the PCAOB under the tremendous leadership of chairman and meetings hater William Duhnke. In a letter dated Oct. 17 to SEC Chair Jay Clayton, Sens. Sherrod Brown (D-OH) and Jack Reed (D-RI) called […]

The SEC Got Rid of the Only PCAOB Member Not Drinking the William Duhnke Kool-Aid

Ladies and gentlemen, THIS is the current state of your PCAOB under the leadership of William Duhnke, according to the Wall Street Journal: A watchdog tasked with protecting investors by policing audits of public companies has slowed its work amid board infighting, multiple senior staff departures, and allegations that the chairman has created a “sense […]

Ex-PCAOBer Jeffrey Wada Gets Prison Time For Being a Blabbermouth In KPMG Scheme

Being passed up for a promotion can cause a person to do really dumb things in a fit of anger. For now-former PCAOB inspections leader Jeffrey Wada, the really dumb thing he did was illegally tip off executives at KPMG—not once but twice—about which KPMG audits the PCAOB would be reviewing so the firm could […]

At Least EY’s 2017 PCAOB Inspection Report Is Not as Not Good as KPMG’s

The PCAOB just released EY’s 2017 inspection report, and there’s some good news and some bad news for the Black and Yellow. The good: Congrats, EY, your audit deficiency rate of 31% is below your historical average deficiency rate of 32%. Of the portions of 55 issuer audits PCAOB inspectors reviewed during 2016, 17 weren’t […]

The PCAOB Hates Meetings As Much As We Do

Going Concern staff has historically not been fond of meetings. Caleb hated them. Adrienne doesn’t like them because that means she has to wake up before noon. And I don’t particularly care for meetings either. They’re usually a waste of my time. According to our friend Francine McKenna at MarketWatch, the PCAOB seems to be […]

Marcum’s Microcap Conference Seemed Like a Great Event for Auditor Independence Violations

In the storied history of auditor independence violations by PCAOB-registered accounting firms, Marcum broke the rules in a rather unique and spectacular way: it publicly advocated its audit clients as investment opportunities. The PCAOB was probably giddy writing and sending out this press release on Sept. 10: The Public Company Accounting Oversight Board today announced […]

Ex-KPMG Partner’s Request to Have His Wire Fraud Conviction Thrown Out Gets Shot Down, Crashes, Burns

Welp, so much for that. David Middendorf, former national managing partner for audit quality and professional practice at KPMG, is scheduled to be sentenced in Manhattan federal court tomorrow, according to Law360, for his role in an information-stealing scheme in which PCAOB insiders fed KPMG executives secret plans on which of the Big 4 firm’s […]

Ex-KPMG Executive Director Who Was Major Player In PCAOB Cheating Scandal Sentenced to Eight Months In Jail

The first prison sentence was handed out today in Manhattan federal court to one of the five former KPMG executives indicted in a scheme to steal confidential audit inspection information from the PCAOB. Cynthia Holder, a former PCAOB inspections leader who later worked as an executive director at KPMG, was sentenced to eight months in […]

PwC Mexico Partners Must Have Thought Auditor Independence Rules Did Not Apply to Them

A friendly reminder to audit firms: an auditor must maintain independence in both fact and appearance. Maybe PwC Mexico forgot this when it took over in fiscal year 2016 as the auditor of one of the largest financial services holding companies in Mexico. It just so happened that at the time the engagement letter was […]

Let’s Give a Big Hand to BDO For Not Having the Worst 2017 PCAOB Inspection Report

The PCAOB released the 2017 inspection report for BDO USA at the end of June, and while the firm should still hang its collective heads in shame for there being deficiencies found in nine of the 23 audits inspected in 2016, for a 39% failure rate, there are a few positive things that Bravo Delta […]

Which KPMG Scandal Is Worse: PCAOB ‘Steal the Exam’ or CPE Training Exam Cheating?

Since Monday when the SEC announced it had fined KPMG $50 million for not one but two scandals involving auditor misconduct at the firm, I’ve been thinking about which scandal is worse. Is it KPMG audit partners stealing confidential information from rogue PCAOB employees in order to better the firm’s audit inspection scores OR is […]

SEC Says $50 Million Fine For KPMG Is ‘Significant’ and ‘Appropriate’ For All That Cheating Going On

The SEC made official today the news that Dave Michaels of the Wall Street Journal broke late last week, announcing that KPMG will pay $50 million to settle allegations that former partners “stole the test” by using confidential information that was being fed to them by a PCAOB insider to improve the firm’s performance on […]

$50 Million Fine SEC Is Reportedly Giving KPMG Over PCAOB Scandal Isn’t Big Enough

Dave Michaels of the Wall Street Journal broke some huge news late last night about a huge fine the SEC could levy against KPMG later this month because of several former partners’ involvement in one of the biggest U.S. accounting scandals in recent years—stealing secret audit inspection information from the PCAOB. KPMG LLP is preparing […]

Ex-EY Audit Partner’s Lousy Audit Judgment Landed Him a $25,000 Fine From the PCAOB

Earlier today, we talked about audit quality or the lack thereof in Australia, the U.S., and, for that matter, all over the world. Well, this latest enforcement order from the PCAOB doesn’t help make a case that audit quality at the biggest accounting firms in the U.S. is getting any better. Compliance Week reported: The […]

PCAOB Doesn’t Take Kindly to Auditors Who Alter Audit Documentation Prior to an Inspection

For years, the PCAOB has pleaded with auditors to quit altering audit workpapers after being notified of an inspection, and some auditors continue to thumb their noses at the PCAOB. Like Humayoun Khan, a former PwC auditor, who was accused of improperly altering a previously archived workpaper in anticipation of a PCAOB inspection. A PCAOB […]

Ex-KPMG Partner David Middendorf Believes He’s Been Done Wrong, Wants a Crack At a New Trial

Don’t get out those orange prison jumpsuits just yet for former KPMG partner David Middendorf and former PCAOB inspections leader Jeffrey Wada. The two men are asking a Manhattan federal court to throw out their wire fraud convictions or grant them a new trial, saying the government didn’t provide enough evidence to support the guilty […]

PCAOB Releases Teaser Trailer of 2018 Inspection Findings

Testing internal control over financial reporting, assessing risks of material misstatement, and auditing accounting estimates (you know, the yoozh) continue to trip up auditors, according to the PCAOB, which offered a sneak preview of what we can expect in 2018 audit firm inspection reports. More than 160 U.S. audit firms were inspected by the PCAOB […]

It Seems the PCAOB and SEC Are Giving Accountants the Benefit of the Doubt More These Days

Maybe it’s because the PCAOB had a new chairman and a whole new board at the beginning of last year. Or maybe it’s because the audit regulator’s longtime enforcement chief bolted last May and the position still hasn’t been permanently filled. Whatever the reason, the PCAOB settled only 13 enforcement actions against accountants in 2018, […]

The PCAOB Is Sick and Tired of Not Being Told About Firms’ Past Disciplinary Hearings

RSM US isn’t the only firm that has been lazy about disclosing to the PCAOB that they’ve been involved in a non-PCAOB disciplinary proceeding. In fact, RSM’s affiliate in Hong Kong and Deloitte’s affiliate in Colombia are also guilty of taking too damn long to send the PCAOB the proper paperwork. And now both firms […]

PwC’s Latest PCAOB Inspection Report Is Fairly Unspectacular

So far among the top seven firms in the U.S., the PCAOB has released 2017 inspections reports for five: one was god-awful (RSM US), one was horrible (KPMG), one was pretty, dare I say, good (Deloitte), and one was dynamic (Grant Thornton). PwC’s inspection report would probably fall on the “good” side (if you consider […]