The Public Company Accounting Oversight Board urged companies and investors to pay greater attention to the findings of its annual inspections of audit firms
The Big Four accounting firms have admitted hundreds of violations of regulations in the US that are designed to protect the independence of their audit work, the Financial Times has reported.
The admissions by PwC, KPMG, Deloitte and EY come after the Public Company Accounting Oversight Board urged companies and investors to pay greater attention to the findings of its annual inspections of audit firms, which are expected to be released in the coming weeks.
It is understood that US regulators require audit firm staff and their immediate family to make thorough financial disclosures. They also ban employment and financial relationships with audit clients that could impair the firm’s independence.
According to PwC, it has identified 129 breaches of independence rules, affecting 74 clients. PCAOB inspectors also found a further one themselves, while inspecting audit work in 2022.
These figures were included in an update to PwC’s audit quality report, which is published on its website.
Meanwhile, Deloitte revealed in its audit quality report last month that it had told PCAOB inspectors of 129 breaches across 78 clients in 2022 — affecting approximately 3% of its US audits — and 107 across 53 clients in the 2023 inspection cycle.
The Financial Times reported that KPMG is the only Big Four firm not to have stated its figures, which will become public in the PCAOB’s forthcoming inspection reports for 2022.
A PCAOB spokesperson said: “Auditor independence underpins the integrity of our capital markets and is essential to ensuring investors can trust the financial statements they rely on to make decisions.”
Article from Accountancy Today