The Public Company Accounting Oversight Board has made public additional portions of a 2010 inspection report on Ernst & Young and 2008 and 2009 inspections of Grant Thornton because the firms failed to adequately address some of the quality control problems that the PCAOB had identified within a year, although Grant Thornton claims the problems have since been addressed.
In the case of EY, the PCAOB said in its expanded report that as of Nov. 30, 2012, the firm had not addressed certain criticisms in the report to the board’s satisfaction. Among the problems identified were deficiencies in the engagement quality review process. In an inspection of four audits, PCAOB inspectors found that the partners did not appropriately evaluate significant judgments and related conclusions, and did not perform reviews at a sufficient level of rigor and detail. The inspection results also indicated that the firm, in certain instances, relied heavily on evidence that supported the issuer's conclusion, without sufficiently taking into account new or contrary evidence that was available at the time. “This tendency frequently contributed to the concerns noted in prior inspection reports related to a lack of professional skepticism and deficiencies in auditing estimates,” said the PCAOB.
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