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 2010.
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.