The PCAOB has released its 2009 Inspection Report for Deloitte and out of 73 audits inspected, 15 deficiencies were cited in this year’s review.
The Board writes that deficiencies are “failures by the Firm to identify or appropriately address errors in the issuer’s application of GAAP, including, in some cases, er ikely to be material to the issuer’s financial statements. In addition, the deficiencies included failures by the Firm to perform, or to perform sufficiently, certain necessary audit procedures.”
Issues cited by the PCAOB in the report included goodwill impairment, deferred tax assets, inventory valuation, a failure to identify a “departure from GAAP,” among others. The Big 4 Blog rightly notes that this is the first time that the PCAOB has provided the sample size of the inspections which allows for some surprising error rates:
The error rate in this situation is quite high, almost one of every five audits has errors. Obviously, Deloitte performs thousands of audit each year and extrapolating from a small sample is quite dangerous, nonetheless, even at half of 20%, the natural conclusion is that one in ten audits has an error, and would have gone unnoticed had not the PCAOB done a good post-audit on the audit.
You could really make a fuss about what auditors did and did not do but the fact remains, audits are never perfect. Some are just more unperfect than others. What’s especially interesting is how Deloitte’s attitude has changed with regards to the PCAOB’s findings as compared to last year.
In last year’s inspection report, the Board cited seven audit deficiencies which resulted in a three page letter from Deloitte that, in no uncertain terms, told the PCAOB to get bent and keep their Monday Morning QBing to themselves. This was about as an aggressive of a response from an accounting firm as we had seen so it was definitely a surprise to see a firm lose their cool.
This year, despite the fact that Deloitte was cited for over twice as many deficiencies, the firm is considerably less defensive (read: boring) and put together a concise one page response to the Board’s findings that included the following:
“We have evaluated the matters identified by the Board’s inspection team for each of the Issuer audits described in Part I of the Draft Report and have taken actions as appropriate in accordance with D&T’s policies and PCAOB standards.”
It’s nice to see the firm playing nice with their regulator this year but we’re curious as to how the change in attitude came about. We hope that at least one of the remaining Big 4 will include a little more color in their response.
PCAOB_2010_Deloitte_Touche_LLP
PCAOB Inspection of Deloitte Audit – 20% Error Rate?? [Big 4 Blog]
Audit Deficiencies at Deloitte [WSJ]
– Updated to included statement from Deloitte
Good
Such a worst company like Deloitte. Never seen this kind of companies. Compare to Deloitte Accenture is for better removing employees giving 3 months of notice and 7 months pay. But in Deloitte constantly laying off the employees without prior intimation..
Better not choose Deloitte for your Career, small companies are for better than this big bull..please don’t spoil your careers by choosing this.
Must be tough. Maybe spare a thought for the contractors who are working for them. Who have to give back time for toilet breaks whilst working from home. Working for what may seem like a reasonable daily rate, but being treated like the shi$ on the bottom of a shoe. Constantly monitored on screen to make sure you are doing what you are supposed to. Poor Deloitte eh? Breaching human rights, invading personal privacy, mistreating staff and then telling you not to mention them!
These large payments are at the expense of clients.
One of the worst organization never ever join this organisation this organisation will ruin your career. Startups are better than this.
Deloitte partners voluntarily took a pay cut so that the company didn’t have to lay anyone off in this pandemic. The other comments on this thread are laughable, do they really think that is what goes on at Deloitte?
Most of these negative comments look like a Bot wrote them.
I have worked in this company for almost 2 years. The Deloitte@Canada is the worst company in my last 7 years. They have ruined my work experience and my knowledge. Director of DMC don’t know how to work, how to manage and how to select employees for the project.
Personally, I’ve worked (by proxy) for worse organisations, however it is abundantly clear that it is a numbers game with Deloitte as they try to please the end client at the expense of quality customer service.
Whether this is down to Deloitte’s management being fixated on numbers or the client’s perhaps less than realistic targets is far less obvious & trickier to comment on.
Ultimately, it is the end consumer who suffers even if most the boxes are being ticked.