Washington (Aug. 27, 2004) -- Inspections of the Big Four firms revealed that the firms often either failed to catch or didn't appropriately address misapplications of generally accepted accounting principles by audit clients, the Public Company Accounting Oversight Board said.

The PCAOB, which issued its long-awaited reports on the board’s preliminary inspections of the Big Four on Thursday, said that, in many cases, the firms failed to catch a misapplication by the issuer of an Emerging Issues Task Force pronouncement related to the classification of long-term debt that in many cases resulted in restatements. In addition to errors in the application of GAAP that the firms either hadn't identified or failed to appropriately address, the PCAOB said that some of the audit engagements reviewed "involved some degree of departure from PCAOB standards or the firm's own quality control policies."

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