October 29, 2020

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 Oscar can hang its hat on:

Way to go, BDO.

So, what did we learn from BDO’s latest inspection report? First, there’s this:

Two of the deficiencies described in Part I.A of this report relate to auditing an aspect of an issuer’s financial statements that the issuer restated after the primary inspection procedures. In two of the audits described below, after the primary inspection procedures, the Firm revised its opinions on the effectiveness of the issuer’s ICFR to express adverse opinions.

Second, the most errors were found in the ol’ “deficiencies related to both the financial statement audit and the ICFR audit” column:

 

 

 

 

Next, BDO auditors seemed to struggle mightily with testing the design and/or operating effectiveness of controls selected for testing:

 

 

 

 

And Issuer B’s audit was a total clusterfuck when it came to AS 2201, An Audit of Internal Control Over Financial Reporting That Is Integrated with An Audit of Financial Statements:

 

 

 

 

 

 

 

 

 

 

 

The problems BDO had with Issuer B’s audit spans four pages, so here’s a sampling of how this audit didn’t go according to plan:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BDO’s response to the inspection report findings mimicked the responses that every other firm gives: “We remain committed in making audit quality our top priority.”

But BDO has to step up its auditing game even more now that CEO Wayne Berson will be taking over as vice chair of the Center for Audit Quality on Oct. 1. I’m sure the firm’s auditors don’t want to make Wayne-o look bad.

Here’s the 2017 PCAOB inspection report audit deficiency rate scorecard as of today (best to worst):

EY’s 2017 inspection report still hasn’t been released.

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.

Related articles

Wayne Berson Admits He Is Driving Some People Crazy at BDO USA

In a wide-ranging interview with CJ Prince of Chief Executive magazine, BDO USA CEO Wayne Berson used “BDO” and “powerhouse” in the same sentence, said “no one wants to go to the 5th best firm” (you got dissed, RSM US) but “we don’t see ourselves as inferior to the Big Four,” and explained what CLIMB means […]