KPMG failed to evaluate its clients' processes for developing estimates for loan losses, and did not perform sufficient tests of clients' valuation of securities which were considered 'hard to price'
Valuation issues have highlighted as an area of deficiency in an inspection of KPMG US by the audit oversight board.
In the course of inspections of 24 out of 90 KPMG practice offices inspectors of the Public Company Accounting Oversight Board found that the firm displayed weaknesses in valuations as it failed to evaluate its clients' processes for developing estimates for loan losses, and did not perform sufficient tests of clients' valuation of securities which were considered 'hard to price'. Additionally, the firm did not highlight instances in which its clients had strayed from accounting rules.
The PCAOB gave details of ten audits that it inspected, without naming the clients of the firm.
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