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Let’s Congratulate Grant Thornton For Its Dynamic and Record-Breaking Audit Failure Rate

Colin put this in ANR this morning but it's the kind of thing that deserves a post of its own just to make sure you don't miss it and mock appropriately:

The Public Company Accounting Oversight Board gave a failing grade to Grant Thornton on 65 percent of audits inspected in 2012, the highest failure rate ever registered in a single inspection report by a major firm.

The PCAOB found fault with 22 of the 34 Grant Thornton audits scrutinized, a notable jump from the 15 of  35 audits, or 43 percent, with problems in 2011. In the four years that the PCAOB has provided data in its reports on how many audits it inspects, only Crowe Horwath has registered a failure rate above 60 percent, hitting 62 percent in 2011 and 2010.

65 percent! *pulls out fingers* Ok let's see that's… *counting on fingers* … holy crap! That's way over half!

Well, you have to admit managing to screw up 22 of 34 audits is pretty darn dynamic.

It's worth noting that McGladrey, BDO, and Crowe Horwath inspection reports have yet to be released, so one of them could still steal the title of worst auditors ever from Grant Thornton. As Compliance Week pointed out, Crowe is the previous title-holder so if you're the betting sort, you might have a few bucks on a failure rate over 60 percent already.

In its response to the PCAOB [PDF], GT noted that while the findings were a tad upsetting given how hard the firm tried not to suck so much, you guys should all keep in mind that this was like forever ago and GT has since totally figured out how to obtain proper evidence to support its opinion. wWrote our pal Chipman and national managing partner of audit Trent Gazzaway:

"The volume of findings in this report is concerning and of great importance to our dedicated professionals. Nineteen of the 22 engagements included in Part 1 of this report (86%) include finding related to the audit of internal control over financial reporting (ICFR). These audits of 2011 financial statements were completed during or before the spring of 2012. In the summer of 2012 we revised our ICFR methodology and training in response to the PCAOB's increased concern about the quality of ICFR audits across the entire auditing profession."

So you see, guys? IT'S COOL, GET OFF THEIR BACKS.

"Those changes were in effect during our audits of 2012 financial statements and we believe have been effective at improving audit quality in this important area. At the same time we continue to strive for and are finding improved audit quality in other audit areas."

Alright, then, we're just going to have to trust you, GT. Because if we don't have trust, we don't have anything.


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