Not too long ago, RSM US had one of the worst PCAOB inspection reports we’ve ever seen. How bad was RSM’s audit quality? R-E-A-L bad.
The number in the red is … well … not a good number. That would be the number of audits the PCAOB inspected that had problems so big that the audit cops determined RSM had not obtained sufficient appropriate audit evidence to support its opinion on the issuer’s financial statements and/or internal control over financial reporting.
For those of you scoring at home, that’s a failure rate of 73%, the firm’s worst ever by far, and RSM had some doozies in the past when it was known as McGladrey.
At that point RSM couldn’t be much worse at auditing, so it wasn’t a complete shock that the firm’s audit deficiency rate got a lot better (29%) in its 2018 PCAOB inspection report.
So if 2017’s grade was an F- and 2018’s was, say, a C+/B-, how did RSM do on its 2019 auditing report card from the PCAOB? I’d give ’em a B+:
So in the span of three PCAOB inspection reports, RSM’s audit quality has improved from failing 73% of audits inspected to 29% of inspected audits having deficiencies to 20% in its 2019 report. High five, RSM!
Of the three ones with mistakes, two had deficiencies in both financial statement and ICFR audits, and one had mistakes in ICFR only.
Here are the areas where RSM auditors struggled the most in 2019, as well as 2018 and 2017:
Of the three wayward audits, two were for issuers in the financials industry, while the other one was an issuer from an unidentified industry.
If you see anything else of importance in RSM’s 2019 inspection report, let us know:
Related article:
RSM US’s 2018 PCAOB Inspection Report Is a Lot Less Deplorable Than the Last One
Jason, you should have Adrienne write some articles about PCAOB inspection reports and let you write about interesting topics. I never said you were a bad writer or don’t have talent. But it seems like all your articles are about the same thing…BREAKING NEWS: Big 4 firms suck at auditing.
Going concern used to be the pre-eminent accounting tabloid. Now it’s just a daily rundown of (1) which firm did a little less badly than all the other firms on their most recent PCAOB review, (2) which firm poached a big wig fat ass from another firm, and (3) what score did everyone get on their CPA exam?
I miss the good ‘ole days of Going Concern when you used to write articles about interesting subjects like massive fraud by audit partners (the legendary Scott London) and staff accountants changing careers into more productive and inspiring lines of work, like taking it up the ass as a porn star (the legendary Veruca James).
of the 7, how many resulted in a restatement of the financial statements? The answer is NONE.
This is one of the most common criticisms of the PCAOB on this site, and after all this time, the very simple concept behind it continues to evade the young auditors of America. I don’t know why it is so difficult for people to understand: The purpose of a PCAOB review is not to determine if the clients financial statements were materially correct or not, it is to determine if the auditor followed the appropriate policies and procedures in completing their audit. Whether or not the client subsequently needed to restate their financial statements or not is completely, 100% irrelevant here. Why is this so hard to understand? Why?
Lol; keep reaching for silver linings instead of supportable opinions
I don’t understand why anyone cares about RSM anyway. What a joke of a company. They will probably be out of business within 10 years.