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May 10, 2010

PCAOB finds 15 deficiencies in Deloitte audits

The Public Company Accounting Oversight Board (PCAOB) found faults in 15 of the 73 audit inspections carried out on Deloitte US.

The PCAOB said Deloitte failed to obtain sufficient competent evidence to support its opinion on the issuer’s financial statements or internal control over financial reporting in several inspected audits.

Examples of the deficiencies included:

– A failure to give sufficient weight to relevant evidence that was more objectively verifiable;

– A failure to sufficiently evaluate the effect of certain events on its assessment of the potential impairment of goodwill at year end;

– A failure to perform adequate audit procedures to test the valuation of an issuer’s inventory and investments in joint ventures (the primary assets of which were inventory);

–  A failure to adequately test the valuation of an issuer’s inventory and its investments in unconsolidated entities (the primary assets were inventory investments); and

– A failure to adequately test an intangible asset for impairment.

In a written response to the PCAOB, Deloitte said it has evaluated the matters identified by the board’s inspection team for each of the issuer audits and taken appropriate action.

 

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