The Public Company Accounting Oversight Board has released a report on its 2014 inspection of KPMG LLP, finding deficiencies in 28 of the 52 audits it reviewed.
Deficiencies in 27 of the audits related to testing the internal controls over financial reporting at the companies KPMG was auditing. In 19 of the audits, the PCAOB inspectors found deficiencies in testing for the purpose of issuing an opinion on the financial statements.
The problems with the 2014 inspection come a year after the PCAOB released previously nonpublic portions of its reports on its 2010 and 2011 inspections after KPMG failed to address some of the PCAOB’s quality control criticisms during the period given to remediate them (see PCAOB Finds Continuing Quality Control Issues at KPMG). In its 2013 inspection report, the PCAOB found deficiencies with 23 of the 50 audits it reviewed.
The firm defended the quality of its audits. “KPMG continues to be fully committed to performing consistently high-quality audits,” said a statement emailed to Accounting Today by spokesman Robert Wade. “We are always mindful of our responsibility to the capital markets, and the PCAOB’s inspection process continues to play an important role in assisting us and the profession as we identify areas where performance can be enhanced and audit quality control systems can be improved. In recent years, we’ve taken robust steps to further our commitment to audit quality. These include significant investments in new resources and technology, extensive root cause analyses of issues identified by the PCAOB and our own monitoring processes and increased training and communications for all of our people. These efforts, as well as additional initiatives undertaken since the 2014 inspections were completed over a year ago, have led to significant improvements which will be reflected in future inspection reports.”
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