• Register
Return to: Home > News > Financial Results > PCAOB finds fault with KPMG US audits

PCAOB finds fault with KPMG US audits

The US Public Company Accounting Oversight Board (PCAOB) found problems in half of the audits it inspected from KPMG US in 2017, as well as almost half of inspections the year before.

The most common failures in its 2017 inspections included a failure to sufficiently test the design and/or operating effectiveness of controls that included a review element (found in 17 audits) and a failure to identify and test any controls that addressed the risks related to a particular account or assertion (found in 13 audits)

The PCAOB warned against drawing wide conclusions about the frequency of deficiencies through KPMG US’s practise as inspections focussed on riskier work.

At the same time, the PCAOB releases expanded reports into KPMG US from 2014 and 2015. In their inspections, the PCAOB assess a firms system of quality control related to issuer audits. Any criticisms or discussions of defects or potential defects remain private so long as the firm addresses these criticisms to the Board’s satisfaction within 12 months.

On Friday the PCAOB said KPMG had not addressed all of the quality control issues to the satisfaction of the Board in this time frame for its 2014 and 2015 reports, and released the expanded reports.

In a written response attached to the expanded reports, KPMG US chairman and CEO Lynne Doughtie and vice chair of audit Frank Casal admitted they agreed with the PCAOB’s determination.

They said: “We take seriously our failure to timely address these criticisms. Notably, during a significant portion of the applicable period, remediation efforts were being led by individuals who engaged in conduct that undermined the integrity of the regulatory process through their inappropriate used of PCAOB confidential information.”

KPMG said upon learning this it had taken remedial actions and informed the PCAOB and Securities and Exchange Commission.

They added a new leadership team appointed over the past 18 months, as well as improvements to its governance code make clear the firm was continuing its commitment to improve audit quality.

 

Top Content

    South Africa: sensing new opportunities

    It has been an interesting couple of years for the profession in South Africa. A number of high-profile scandals have brought the profession and the role of auditors into sharp public focus, brewing a distrust towards accountants and a large expectations gap. Joe Pickard reports.

    read more

    Ghana: a quest for consistency

    Ghana’s current economic profile would suggest a fertile landscape for purveyors of accounting services. But inconsistent approaches to compliance and application of standards – coupled with problems in the banking sector and consequent liquidity constraints – have created a challenging environment. Paul Golden writes.

    read more

    Drone technology: audit takes to the skies

    The movement towards a digitised era has already impacted the auditing profession in a number of ways, from blockchain to artificial intelligence. Now firms are taking to sky and using drone technology in their audits. Mishelle Thurai speaks to Big Four firms to find out more.

    read more

    SBC: a new alliance joins the market

    Jonathan Minter speaks to Paul Tutin, chair of founding firm Streets Chartered Accountants, about why the business and its European partners took the decision to launch their own association.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.