The Public Company Accounting Oversight Board has released critical inspection reports for the audits of PricewaterhouseCoopers and Ernst & Young, saying that the firms' work has so many deficiencies, their evaluations of companies' finances may be questionable.

The reviewed audits date back to more than a year ago in most cases. The PCAOB inspection team looked at PwC audits from May 2004 to January 2005, and E&Y audits from July to December 2004. PwC was found to have deficiencies in areas including auditing receivables and testing internal controls, while E&Y failed to identify errors in the application of generally accepted accounting procedures.

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