PCAOB – Inspection report
In this writing assignment, you need to select 3 inspection reports of firms that failed to address the quality control (QC) criticisms from the PCAOB in a satisfactory manner.

Note: You MUST read page 75 of your textbook (attached) in order to understand the relevant audit standards involved in private and public audits. Generally, different audit standards are used for each. For this assignment, we are concerned with PUBLIC audit standards. Do not reference standards that are related to private audits.

In order to complete this paper, follow the steps below:

Step 1: Click on this link: http://pcaobus.org/Inspections/Reports/Pages/default.aspx
Step 2: Where it says “group by” click on “expanded.”
Step 3: Where it says “sort by” click on “date.”
Step 4: Below, click on the small + icon where it says “expanded report released” to see a list of all inspection reports where the criticisms have been made available to the public. Click on the small arrow next to the “sort by date” in order to show the most recent reports first.

Research question: Find at least 1 deficiency that is common to 2 DIFFERENT inspection reports that you reviewed (Note: Deficiencies from the inspection are summarized in part I and are detailed in part II of the report). Why do you think this deficiency is a common failure across the 2 audit firms? What implications do these common failures have on future audits and audit standards? NOTE: DO NOT SELECT “DUE CARE” AS ONE OF THE FINDINGS.

· Introduction (20 Points): Introduce the topic. Take a position on why you think the deficiencies are a common failure, and briefly discuss what this means for future audits, and audit standards.
· Body Paragraph 1,2.. (40 Points): Support your position on why the selected failures are common across the firms. Be sure to include in your discussion the relevant audit standard that has not been followed by the firm. Often they are cited in the inspection report, and you can google the standard to read the standard in full.
o A few things for you to think about when analyzing common failures:
§ Was a new FASB standard issued during the year of audit? Did the firm have time to react to the new standard?
§ Were there any new PCAOB standards issued during the year of audit? Did the firm have time to react to the new standard?
§ Was the failure associated with a complex accounting area, for example fair value measurement or revenue recognition? Conversely, was the failure associated with a simple procedure that is commonly taken for granted in audit planning?
(NOTE: these questions are to help you think about possible reasons – you are not limited to these points or required to discuss these points, but you need to come up with potential reasons for the common failure.)
· Body Paragraph 3 (20 Points): Discuss the implications for the future. Do you think these common findings could result in the PCAOB putting out a new standard? Refer to the PCAOB current standards and proposals to see if you find something recently approved or in process that is associated with one of your common failures. You may or may not find something. If you do not, discuss the impact these findings will have on future audit teams. Will the firms need to spend more hours on the audit? Could the problem be solved with better planning procedures? Is more man power needed? Will additional trainings ensue?
· Conclusion (20 points): Restate and recap. Similar to the introduction, see the accompanying outlining guide.

PCAOB – Inspection report

Helpful Links:

PCAOB Quality Control Standards: https://pcaobus.org/Standards/QC/Pages/default.aspx

PCAOB Audit Standards: https://pcaobus.org/Standards/Auditing/Pages/PreReorgStandards.aspx

PCAOB Recent or in progress standards: http://pcaobus.org/Standards/Pages/CurrentStatus.aspx

FASB Standards:http://www.fasb.org/cs/ContentServer?c=Page&pagename=FASB%2FPage%2FSectionPage&cid=1218220137102

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