Please ensure Javascript is enabled for purposes of website accessibility
September 23, 2023

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 standing on the sidelines looking like McKayla Maroney during the 2012 Summer Olympics in London. It does seem a bit fishy that PwC, after making significant mistakes in 18 of its 60 audits of public companies reviewed by the PCAOB in its 2019 inspection report, dropped to only one deficient audit out of 52 inspected in its 2020 report—which is a record-low 1.9% error rate. And if it wasn’t for PwC, Deloitte would be the one with the all-time low deficiency rate of 3.8%.

There has been speculation that because of the pandemic and the recent unrest at the PCAOB, the audit cops are going soft on audit firms during the inspection process, resulting in the historically good 2020 report cards for PwC and Deloitte. But if you look at Deloitte’s deficiency rates in its past five inspection reports, the quality of the firm’s audits has been trending in the right direction:

  • 2015: 24%
  • 2016: 24%
  • 2017: 20%
  • 2018: 11.5%
  • 2019: 10.3%

So it’s not totally inconceivable that Deloitte’s auditing improved as much as it did from 2019 to 2020. The PCAOB found deficiencies in both the financial statement and internal control over financial reporting audits during the most recent inspection cycle, as the graphic below shows:

According to the PCAOB, the most frequently identified deficiencies were:

One of the deficient audits was for a Deloitte client in the consumer staples sector; the other was for a client in the industrials sector.

So if PwC and Deloitte got gold stars from the PCAOB, what did KPMG, EY, BDO USA, and Grant Thornton get? We’ll let you know in the coming days. In the meantime, Deloitte’s 2020 inspection report is below in its entirety:

Related articles:

It’s True: PwC Had a Nearly Flawless 2020 PCAOB Inspection Report
Deloitte Is Doing a Much Better Job Lately of Not Screwing Up Audits

Latest Accounting Jobs--Apply Now:

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

1 Comment

  1. Why keep mentioning that the speculation is that because of the pandemic, that ” the recent unrest at the PCAOB, the audit cops are going soft on audit firms during the inspection process” when KPMG had issues with 26.4% of their inspections? Clearly the PCAOB did not go easy on firms this year.

Comments are closed.

Related articles

Deloitte University Is Getting Bigger Because God Forbid KPMG Have the Superior Brainwashing Compound

Dallas Morning News reported yesterday that groundbreaking on a “massive expansion” of the already massive Deloitte University campus in Westlake, Texas will begin in January. Deloitte’s been wanting to expand for a while but was waiting on Tarrant County commissioners to approve more than $5 million in tax breaks. “We certainly appreciate the great corporate […]

PwC Canada Totally Blew Their Perfect Score on PCAOB Inspections This Time Around

A few days ago the paper-pushers at the PCAOB released 15 new inspection reports and three expanded reports for the following firms: Inspection reports De Visser Gray LLP (Canada) Ernst & Young Limited Corp. (Panama) Frost, PLLC Harbourside CPA LLP (Canada) Keith K Zhen CPA Maggart & Associates, P.C Miller Wachman LLP PBMares, LLP PKF […]