The Public Company Accounting Oversight Board said that it won't publicly release the control problems and structural deficiencies uncovered at the Big Four firms during its initial round of inspection reports.
The board said that those issues, originally reported directly to the firms in August 2004, were adequately addressed by the firms over the following year as required under the Sarbanes-Oxley Act.
In the first of two releases, the PCAOB provided information about its process for determining whether a registered accounting firm has satisfactorily addressed quality control criticisms in an inspection report. The report is available at www.pcaob.net/Inspections/2006-03-21_Release_104-2006-077.pdf .
In the second release, the board described observations about efforts undertaken by the Big Four firms to address the identified quality control concerns. A summary of some of the steps taken by the firms in areas such as audit performance, evaluation and compensation of partners, independence, acceptance and continuance of clients, and supervision of foreign affiliates is included. The report is available at www.pcaob.net/Inspections/2006-03-21_Release_104-2006-077.pdf .
"Our initial experience with the process generally validates the premise of the approach set out by Congress," said acting chairman Bill Gradison, in a statement. "The large firms were responsive to the board's supervisory model, and as a result of the process, the board believes that the firms have crafted and undertaken important steps that, if conscientiously implemented, will have beneficial effects on audit quality."
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