PCAOB: Small Accounting Firms Must Work Toward Acceptable Audits

Lora Bentley

Small accounting firms do a lackluster job when it comes to conducting Sarbanes-Oxley audits, this law.com story says. The Public Company Accounting Oversight Board inspected 497 audit firms with 100 or fewer clients in the last three years. According to a recently released PCAOB report, 248 of 439 individual reports issued included findings of "single or multiple audit deficiences" and quality control problems. On the other hand, only 30 percent of the individual reports included findings of no audit deficiencies.

law.com reports the results are a cause of concern for observers regarding the ability of smaller firms to help meet an increased need for auditors once smaller public companies are required to comply with the internal controls provisions of Sarbanes-Oxley.

Areas of concern included in the PCAOB's report, according to the article:

  • business combination accounting
  • client viability evaluations
  • revenue recognition
  • related-party transactions
  • equity transactions

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