The Public Company Accounting Oversight Board released its report on its 2006 inspection of KPMG's auditing work, outlining a number of deficiencies.
In one case, the PCAOB noted, the Big Four firm "failed to identify a significant error in certain line items reported for operating activities on the statement of cash flows and to test the amounts reported for investing and financial activities on that statement."
The report also chided KPMG for failing to test the accuracy of the recorded purchase price when the same company acquired the assets of another entity. PCAOB reports do not name the specific companies that are the auditor's clients.
With another of KPMG's clients, the PCAOB noted that KPMG failed to test the effectiveness of the internal controls for the first three quarters of the company's fiscal year, and called into question KPMG's conclusion that the company's internal controls were operating effectively throughout the year.
In response to the PCAOB report, KPMG said it has addressed the engagement-specific findings identified in the report, and in some cases performed additional audit procedures or supplemented its audit documentation.
