That the auditing world's most prestigious
Less frequently prod
The avoidance of fraud
By checking controls and procedures."
"An auditor ought to endeavor to
Ensure that malfeasance would never do;
By checking receipts,
You'll foil deceits
In booking expenses and revenue."
America's accounting watchdog says that the quality of auditors' checks of their clients' accurate bookkeeping is heading in the wrong direction. According to the Public Company Accounting Oversight Board, problems are numerous and growing in audits of companies' internal controls. Inspection reports of 2011 audits (not all of which are yet completed) found that 22% of them had deficient internal control checks, up from 15% in 2010. Reuters reports:
"Audit firms are required to test controls that could have an impact on financial statements and attest that the safeguards are adequate, but in many cases the companies in which the auditors gave passing grades, the PCAOB found there was insufficient evidence to support that opinion."The culprit may be understaffing; in many of the deficient cases, the auditing firms had made headcount reductions. The PCAOB looked at internal control checks by the "Big Four" audit firms - Deloitte & Touche, Ernst & Young, KPMG and PricewaterhouseCoopers - plus second-tier firms BDO Seidman, Grant Thornton, Crowe Horwath and McGladrey.