Why Audits Fail: Insight from Recent Audit Deficiencies

• In Event: Reception: ELS and Research Presentations, plus CTLA Hands-On with Tech Tools
  In Poster Session: Research Interaction Forum

Abstract

Over the last ten years, the Public Company Accounting Oversight Board (PCAOB) has published thousands of public company auditor inspection reports. Each year the inspection process evolves and develops based on past findings and current issues. Inspectors adjust the focus of their investigations based on evidence indicating the accounting standard and control issues that are the most challenging for the issuers and the auditors. All accountants, including those in private companies, should be familiar with the types of audit deficiencies that have been flagged in recent PCAOB inspections, because the underlying issues involve activities that are common to all organizations. Revenue recognition deficiencies, the most common audit concern, can and do arise in any organization, including not-for-profit entities. This paper updates a similar 2009 paper and examines recent inspection reports to provide insight into the types of issues that have led to recent audit deficiencies highlighted in PCAOB inspection reports.

Author

• Dawn Hukai, University of Wisconsin–River Falls