Deloitte & Touche is the first of the Big Four to have its annual inspection posted by the Public Company Accounting Oversight Board this year.The PCAOB’s Nov. 30 report was posted to the board’s Web site late last week and cites Deloitte for failing to obtain sufficient evidence to back up decisions in a number of audits of public companies. The firm disagreed with the board's conclusions in nearly two-thirds of the audits cited, offering a rebuttal of many of the board's criticisms as part of a response letter included with the PCAOB's report
The latest report cited 17 Deloitte audits as needing improvement. The report examined audits performed by Deloitte in 2005 of companies' 2004 financial results. The board's report issued in 2005 on work done in 2004, cited eight audits for criticism.
In its response letter, Deloitte said that, “Although in certain instances the documentation for the matters cited in the [report] might not have been as extensive as, or organized in a manner that the viewers would have preferred … We disagree with these comments, which are presented in a manner that could result in a reader of the report reaching inaccurate and inappropriate conclusions.”
In addition to its inspection report on Deloitte, the PCAOB also issued reports on Grant Thornton LLP and BDO Seidman LLP -- both containing similar criticisms of audit documentation.
This year's reports, which can be viewed at www.pcaob.org/Inspections/Public_Reports/index.aspx, are based on inspections conducted between May and October 2005. Reports for the remainder of the Big Four will be released before the end of the year.
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