PCAOB sees audit deficiencies level off at largest firms, but problems remain

The PCAOB has posted inspection reports for all 2023 annually inspected firms, including the six U.S. Global Network Firms (GNF). 

The inspection reports are accompanied by a new staff Spotlight publication, which provides an overview of staff observations from the 2023 inspections. Staff observations include the fact that while overall deficiency rates continued to increase in the aggregate, with 46% of the engagements reviewed having at least one Part I.A deficiency, “we have begun to see the aggregate deficiency rate at the Big Four firms level off, as well as improvements in the deficiency rates at several of the other annually-inspected firms.” The Spotlight also explores how outliers influence the overall average, among other observations. 

The PCAOB also published new charts on its website illustrating much of the data in the U.S. GNF and U.S. annual Non-Affiliate Firms (NAF) inspection reports for the first time as part of ongoing efforts to increase transparency in inspection data and make it easier for stakeholders to understand and compare inspection results both across firms and over time. The charts build on the May 2023 transparency improvements for inspection reports and the July 2023 release of new features allowing PCAOB website visitors to easily filter and compare thousands of audit firm inspection reports. 

“These inspection results point to some small signs of movement in the right direction,” said PCAOB Chair Erica Williams. “Still, overall deficiency rates are unacceptable, and firms must do better. Now is the time to double down on efforts to improve and deliver the audit quality investors deserve.” 

“Making inspection information accessible and actionable for PCAOB stakeholders is a top priority and a means to improve audit quality,” said Christine Gunia, Director of the PCAOB’s Division of Registration and Inspections. “We will continue to search for new ways to bring our insights to investors, audit committees, and others.”