The PCAOB just released reports on its inspection of nine CPA firms. The only reports previously released were of limited inspections of the Big Four. Two of these nine firms received reports that were very critical.
With regard to a six-partner Birmingham, Ala. firm that had one public company client, the PCAOB identified three specific audit deficiencies. They were failures to (1) adequately test a self-insurance reserve, (2) document the firm's understanding of controls or test data from the service organization used by the audit client in recording the self-insurance reserve, and (3) analyze the impact of recording prior year adjustments in the current year's financial statements. As a result of the inspection, the public company client restated its financial statements
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