PCAOB finds auditor evaluation deficiencies

The Public Company Accounting Oversight Board says there are significant and consistent deficiencies in auditors’ evaluations of audit evidence.

According to a new spotlight report released Thursday by the PCAOB, approximately 17% of comment forms in both the 2021 and 2022 inspection cycles contained deficiencies where the auditor did not perform sufficient procedures to test (or sufficiently test controls over) the accuracy and completeness of information produced by the company or other data and reports. A comment form is the initial communication to firms of the observed deficiencies from the PCAOB’s inspections. 

Completeness and accuracy in an audit are necessary in detecting errors as well as fraud. Testing the accuracy of information provided by the company is equally as important, as misstatements can be detected. 

The PCAOB’s report outlines the common areas of inspection deficiencies related to data and reports: 

• Testing the accuracy and completeness of information produced by the company;
• Considering the relevance and reliability of audit evidence;
• Testing the controls over information produced by the company used in the operation of a control;
• Assessing the information used in expectations for substantive analytical procedures; and, 
• Assessing the information produced by a service organization. 

The report also includes reminders for auditors and a list of good practices.