As part of the 91 inspections of smaller audit firms performed over the course of 2004, the Public Company Accounting Oversight Board identified "significant" deficiencies in two of the firms, one finding of which was significant enough to question the firm's audit opinion. According to BNA, the two firms were identified as Dudley, Hopton-Jones, Sims & Freeman, of Birmingham, Ala., which had one Securities and Exchange Commission issuer client at time of the inspection, and Clyde Bailey PC, a sole practitioner in San Antonio with 17 publicly traded clients. With regard to Dudley Hopton-Jones, the oversight body unearthed deficiencies such as inadequate testing of the client's self-insurance reserve, and called into question the firm's audit opinion. The board's report on Clyde Bailey revealed a host of problems, including "inappropriate farming out of substantially all" audit work to another auditor and a number of departures from generally accepted accounting principles. Meanwhile, Dayton, Ohio-based Battelle & Battelle, with four public clients, received a clean audit inspection but did not get a sign-off on its quality control system. The PCAOB will make the quality controls findings public after one year should the firm fail to address them. The firms receiving clean inspection reviews were: Gelfond Hochstadt Pangburn, in Denver; Moore Stephens Frost, of Little Rock, Ark.; Ramirez International Financial & Accounting Services, in Irvine, Calif.; Richard Browne & Co., of Tampa, Fla.; and Saslow Lufkin & Buggy, in Avon, Conn.
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