One of main objectives of Sarbanes Oxley Act 2002 (SOX), was to improve audit quality, for which it established the Public Company Accounting Oversight Board (PCAOB), who has been achieving the objective of audit quality through its inspection process. <\/p>\n\n\n\n
A PCAOB inspection is done to ascertain the audit firm’s adherence to PCAOB standards and rules & also to other rules and professional standards that are applicable to CPA firms in relation to its quality control and the areas of public company audits selected for PCAOB review.<\/p>\n\n\n\n
As per recent remarks by Public Company Accounting Oversight Board (PCAOB) Chair Erica Y. Williams<\/strong> at the U.S. Securities and Exchange Commission (SEC)\u2019s Open Commission Meeting regarding the PCAOB\u2019s proposed 2025 budget, he said \u201cBy the end of 2024, PCAOB staff would have inspected 232 audit firms and more than 920 audits across domestic annual, domestic triannual, international, and broker-dealer audits. These numbers include 79 international inspections of firms and more than 220 audits, including audits of firms in Mainland China and Hong Kong.\u201d<\/em><\/p>\n\n\n\n The above statistics imply that PCAOB is rigorously inspecting audit quality in CPA firms who are conducting PCAOB regulated audits and is bound to increase its inspections in the year 2025.<\/p>\n\n\n\n PCAOB issued Inspection report is divided into two parts part one deals with Inspection observations and Part two deals with Observations related to Quality control. Part one is further divided into three parts i.e. first \u2013 Audit with unsupported Opinion, second – Other instances of non-compliance with PCAOB standards or rules, and third- Independence<\/p>\n\n\n\n A recent release by PCAOB has brought forward the discrepancies being observed PCAOB Inspectors in audits, our white paper focuses on these discrepancies, which will help you to understand what needs to be improved in your audit firm audit techniques in order to improve quality, improve user confidence and keep the regulator satisfied.<\/p>\n\n\n\n In the era where investor confidence is low on numbers presented in financial statements, it is very important that auditors follow prescribed auditing standards in both letter and spirit.<\/p>\n\n\n\n