Audit – PCAOB: Inspection Report
Overview
In regulating the public accounting industry in the United States, the Public Company Accounting Oversight Board (PCAOB) serves three major functions: setting auditing standards, inspecting registered public accounting firms and enforcing auditing standards. In this writing assignment, you need 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 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 2 deficiencies that are common to all 3 of the inspections 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 these deficiencies are a common failure across the 3 audit firms? What implications do these common failures have on future audits and audit standards?
• Introduction (20 Points): Introduce the topic. See the accompanying outlining guide. 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. *Thesis Statement.
• 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 thesis and recap. Similar to the introduction, see the accompanying outlining guide.
• Quality of Writing (100 Points): See the ACCT 461 Writing Rubric
• Total = 100 points
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
Format
• Length: Minimum 1,050/Maximum 1,200 words
• Line Spacing: Double-spaced
• Margins: 1” (Left justification ONLY).
• Font: Times New Roman, 12 point.
• Headings and Subheadings: Please use them as appropriate.
• Page Numbers: At the bottom of your page, with the first page of your writing holding the first page number.
References (APA Format)
You must provide proper citations for all references used to avoid plagiarism. Any direct quotes must be indicated as such. NOTE: Wikipedia.com and blogs do NOT count as references. Include references in your paper using the author/year (Sweeney 2013) parenthetical citation method with the full citation listed in the reference section (i.e., do not use footnotes to list your references). Please see the accompanying APA guide if you are having trouble. A wealth of excellent resources exists at your disposal. I encourage you to use popular and business press articles (New York Times, Wall Street Journal, Financial Times, Business Week, The Economist, etc.) practitioner journals (Journal of Accountancy, CPA Journal, Accounting Today, etc.) and academic journals (The Accounting Review, Accounting Horizons, Auditing, etc.) to inform your research. You have access to these and many more through George Mason University’s Library website.
Other Instructions
• Do not use lists, bullet points, contractions or the second person (e.g., “you”) in your writing.
• Use passive voice sparingly.
Remember, you must submit a paper that is unique to this class.
