The Public Company Accounting Oversight Body
(PCAOB) has identified eight “audit failures” in an inspection of
BDO US audit work for 2010, according to a recently released
inspection report.

The deficiencies are based on BDO’s failure to
identify financial statement misstatements or to comply with
disclosure requirements, as well as the absence of documentation,
the PCAOB report says.  

PCAOB’s conclusions are a result of an
inspection of 31 audits conducted during August to December

The PCAOB said that for one company BDO failed
to evaluate the suitability of the issuer’s value estimation
approach for its three reporting units and whether the issuer’s
approach was in conformity with US GAAP.

For another company, BDO auditors did not
perform sufficient procedures in relation to a significant
multi-year sales contract.

In a response letter to the PCAOB, BDO said
that it has evaluated the matters described in the report and none
of them impacted the firm’s previously issued reports on the
financial statements.