Inspectors at the US Public Company Accounting Oversight Board
(PCAOB) have identified considerable failures of audit – including
audits involving large financial institutions – prior to the
financial crisis.

Speaking at a meeting in Washington, chairman James Doty said that
some of the audits are now also the subject of pending PCAOB
investigations and may lead to disciplinary actions against firms
or individuals.

“In several cases – including audits involving substantial
financial institutions – PCAOB inspection teams identified what
they determined to be audit failures of such significance that, in
the inspectors’ view, the firm had failed to support its opinion,”
Doty said.

Under the Sarbanes-Oxley Act, the disciplinary action must remain
non-public, unless the respondent consents, until PCAOB proceedings
and any Securities and Exchange Commission appeal are finished,
according to Doty who added that this would take a long time.