Deloitte US has asked the national audit
watchdog to not “second guess” its “reasonable judgements”.

The US Public Company Accounting Oversight
Board’s (PCAOB) report on the 2008 inspection of the world’s
largest professional services firm lists deficiencies on seven
audits.

In a letter responding to the draft
report, Deloitte said it had addressed PCAOB concerns on five
audits, but argued the two other cases should be omitted from the
final report because “the audit procedures performed, evidence
obtained, conclusions reached and related documentation were
appropriate in the circumstances”.

The firm said many PCAOB observations reflect
the fact that professional judgements are involved in both auditing
and inspecting audits, and that such judgements may differ.

“A number of the PCAOB’s comments relate to
situations in which we believe the engagement team, in some cases
after significant consultation with specialists and other subject
matter experts, made and documented well reasoned and supported
judgements during the audit,” the firm wrote. “In our view, such
reasonable judgements should be respected and not second
guessed.”

Despite Deloitte’s protestations, the concerns
questioned remained in the final report.

In one instance, the PCAOB alleged Deloitte
failed to sufficiently test its client’s allowance for loan losses
(ALL).

“The firm failed to perform a sufficient
analysis of whether the deteriorating conditions should have
prompted further increases in the qualitative adjustments included
in the ALL,” the PCAOB wrote.

Deloitte argued this comment was contrary to
the evidence in the working papers.

“The audit working papers do include
substantial evidence that appropriate consideration was given and
audit procedures were performed,” the firm contended.

Deloitte noted the focus of the comment was on
a qualitative adjustment that was only one component of the total
ALL and subject to substantial professional judgement.