Yesterday, we discussed Deloitte stinking up the joint with its PCAOB inspection report. While the firm, at large, probably puts out hundreds of quality audits, the PCAOB gumshoes found that 45% of audits stamped with a green dot had deficiencies. Today, the Board stuffed our stocking with Ernst & Young's inspection report and while it's not the bloodbath that Deloitte had, they still had their share of boo-boos. The final count was 13 deficiencies out of 62-ish (on one, E&Y wasn't the principal auditor) audits inspected with "certain of the deficiencies that it observed to be audit failures."
Most notably, as we've learned from the other firms' results, the firm still struggles with testing of fair value for those tricky finanical instruments with no ready value. The report drones on for approximately three pages on just this particular issue. Still, E&Y's percentage of deficiencies for audits inspected is ~21%, which is the lowest of the Big 4, barely nudging out KPMG whose percentage was 22%. This doesn't exactly entitle Black and Yellow to the claim of "Sexiest Auditor Alive 2010" but it has to be good for something. Enjoy the full report below (eggnog and Jameson will help).