The Public Company Accounting Oversight Board has issued its latest inspection report on KPMG, listing deficiencies in several sample audits conducted by the firm.
In the case of one client, PCAOB inspectors noted that the firm failed to test the accuracy of loan delinquency data and borrower credit score ranges that the client had used to estimate its allowance for loan losses. KPMG auditors also failed to consider the credit risk associated with the nature of the client's loans and underwriting policies and to evaluate the reasonableness of the unallocated portion of the allowance, which had not changed in five years. The inspectors also found that the firm failed to perform sufficient procedures to test the interest expense related to deposits.
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