The Public Company Accounting Oversight Board released expanded versions of two inspection reports March 7 that detail previously nonpublic criticisms that the board had of audit quality controls at PricewaterhouseCoopers LLP.
The criticism concerns audits performed in 2008 and 2009 and the firm's apparent difficulty with auditing estimates and fair value and maintaining professional skepticism and supervising the work of units to assure that audits are performed correctly.
PwC responded with a statement, which accompanied the official PCAOB report. It said that the PCAOB's quality control criticisms “relate to some of the most complex, judgmental and evolving areas of auditing.” The firm has taken steps since the board's inspection that have been “important positive contributors to audit quality at our firm,” the statement said.
The PCAOB is required by the Sarbanes-Oxley Act of 2002 to inspect the largest audit firms--those with more than 100 public company clients--annually and issue a report each year. The report is largely divided into two parts: Part I, inspection procedures and certain observations; and Part II, issues related to quality controls.
SOX required the board to keep Part II private for 12 months to allow PwC time to address the board's concerns over quality controls. If the board determines the firm has not adequately addressed those concerns, then it will release Part II to the public.
The 2010 inspection report of PwC is at http://pcaobus.org/Inspections/Reports/Documents/2010_PricewaterhouseCoopers_LLP.pdf.
The 2009 inspection report of PwC is at http://pcaobus.org/Inspections/Reports/Documents/2009_PricewaterhouseCoopers-0325.pdf.
PwC's response is at http://pcaobus.org/Inspections/Documents/03072013_PwCReportStatement.pdf.
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