PCAOB inspections reveal the Big Four auditors were tripped up on auditing procedures related to run-of-the-mill GAAP items.
The Public Company Accounting Oversight Board issued its 2005 inspection reports on Ernst & Young and KPMG on Thursday, citing multiple failures in audits by the two Big Four audit firms. The report on E&Y identifies 10 companies for which audits were deficient, and says that in "some cases" the errors appeared "likely to be material to the issuer's financial statements." The report on KPMG identifies 11 deficient audits, and says that in "one case" the result was likely to be material.
In 2005 the PCAOB reviewed portions of more than 365 audits performed by the nine largest firms and 623 audits performed by 272 smaller firms. A PCAOB spokesman told CFO.com that the regulator does not release information on the number of inspections it conducts on each individual firm.
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