Accountants  News Hubb
Advertisement
  • Home
  • News
  • Accountant News
  • Contact us
No Result
View All Result
  • Home
  • News
  • Accountant News
  • Contact us
No Result
View All Result
Accountants  News Hubb
No Result
View All Result
Home Accountant News

KPMG Still Rocks at Having the Worst PCAOB Inspection Report Among the Big 4

admin by admin
January 4, 2023
in Accountant News


The last of the 2021 Big 4 PCAOB inspection reports belongs to KPMG, which has had the highest audit deficiency rate of the four firms for six out of the previous seven years—the lone exception being 2019. Make that seven out of the last eight:

In the 2021 inspection of KPMG LLP, the PCAOB assessed the firm’s compliance with laws, rules, and professional standards applicable to the audits of public companies.

We selected for review 54 audits of issuers with fiscal years generally ending in 2020. For each issuer audit selected, we reviewed a portion of the audit. We also evaluated elements of the firm’s system of quality control.

We also selected for review two reviews of interim financial information (“interim reviews”). Our reviews were performed to gain a timely understanding of emerging financial reporting and auditing risks associated with issuers that were formed by mergers between non-public operating companies and special purpose acquisition companies (SPACs). We did not identify any instances of non-compliance with PCAOB standards related to the interim reviews that we reviewed.

[…]

Fourteen of the 54 audits we reviewed in 2021 are included in Part I.A of this report due to the significance of the deficiencies identified. The identified deficiencies primarily related to the firm’s testing of controls over and/or substantive testing of revenue and related accounts, allowance for credit losses, inventory, and going concern.

So that’s an error rate of 26%, which is behind EY’s 21.4%, Deloitte’s 13%, and PwC’s 3.6%. The good news for KPMG is its deficient rate for 2021 was slightly better than the one in its 2020 auditing report card—26% vs. 26.4%.

For 2021, eight audits had problems in both internal control over financial reporting and in the financial statement, two had deficiencies in the financial statement only, and four had deficiencies in ICFR only. The most common Part I.A deficiencies related to testing the design or operating effectiveness of controls selected for testing, testing controls over the accuracy and completeness of data or reports used in the operation of controls, testing data or reports used in substantive testing, and in some cases the resulting overreliance on controls when performing substantive testing, according to the PCAOB.

The five main trouble spots for KPMG auditors were:

  • Revenue and related accounts: The deficiencies in 2021 (as well as in 2020 and 2019) related to substantive testing of, and testing controls over, revenue.
  • Allowance for credit losses: The deficiencies in 2021 primarily related to testing controls over the allowance for credit losses.
  • Inventory: The deficiencies in 2021 primarily related to testing controls over the existence of inventory.
  • Going concern: The deficiencies in 2021 primarily related to substantive testing of the evaluation of an issuer’s ability to continue as a going concern.
  • Investment securities: The deficiency in 2021 related to testing a control over the evaluation of investment securities for possible impairment.

KPMG failed five of its nine audits for issuers in the financials sector, while mistakes were found in three of the seven audits of issuers in the consumer discretionary sector, three of the 12 audits of issuers in the industrials sector, two of the seven audits of issuers in the IT sector, and in one of the four audits of issuers in the energy sector. KPMG did get a passing grade in its audits of issuers in the communications, consumer staples, materials, real estate, and utilities sectors.

You can read more about the 2021 audit inspection season at KPMG below.

Latest Accounting Jobs–Apply Now:

Related

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.





Source link

Previous Post

IRS updates guidance on R&D expensing after Congress fails to delay change

Next Post

QuickBooks Connect Sponsor Aware – SaaS Direct

Next Post

QuickBooks Connect Sponsor Aware – SaaS Direct

Recommended

PSA: Change Your AICPA Password NOW (UPDATE)

January 12, 2023

Pay Scale up to 340000, Check Post, Qualification and Other Details

December 19, 2022

Don't miss it

News

Trump used records requests to hinder IRS release of his tax returns

January 30, 2023
Accountant News

Xero Roadshow 2023: Every step counts

January 30, 2023
News

Vacancy for Fresher Business, Management, Finance Graduates at Moody’s

January 30, 2023
News

The Case for Forensic Detectives in Accounting

January 30, 2023
Accountant News

Bad News For Big 4: Educated Men Have Decided to Not Work So Hard

January 30, 2023
News

EITC rules changed this tax season, so be careful

January 29, 2023

© 2022 Accountants News Hubb All rights reserved.

Use of these names, logos, and brands does not imply endorsement unless specified. By using this site, you agree to the Privacy Policy and Terms & Conditions.

Navigate Site

  • Home
  • News
  • Accountant News
  • Contact us

Newsletter Sign Up

No Result
View All Result
  • Home
  • News
  • Accountant News
  • Contact us

© 2022 Accountants News Hubb All rights reserved.