|  | | 2007 News and Press Releases | | |
HEADLINE NEWS:
PwC Disputes Oversight Board's Report, For its review of 2005 audits by PricewaterhouseCoopers, the PCAOB found deficiencies at six of the firm's clients.
Sarah Johnson
CFO.com. October 22, 2007
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EXCERPT: The Public Company Accounting Oversight Board's evaluation of PricewaterhouseCoopers faults the firm for not taking the proper steps to support its audit opinion for six of its clients. However, the Big Four audit firm claims the PCAOB is mistaken in its findings. "We have concluded that, in each instance, our original procedures were sufficient to support our audit conclusions and the opinion rendered at the time," PwC wrote in a letter to the PCAOB dated September 26. The letter is included in the auditor overseer's 2006 inspection report of PricewaterhouseCoopers' 2005 audits, which was released last week. Even though it took issue with the PCAOB's findings, PwC responded to PCAOB's criticism by adding documentation to its working papers for one of the audits that the regulator that had a significant enough deficiency to include it in the report. But providing more evidence of the work it conducted for one client was the only concession PwC made. In another instance, it said one of the PCAOB's findings was "factually incorrect." And for yet another client, PwC used "professional judgment" as a defense for its auditors' work on an audit the PCAOB said lacked proper testing. deed, PwC disputed much more of PCAOB's findings in its response letter to this inspection report than they did in their response to precious reports by the oversight board. On the other hand, there were fewer deficiencies noted this time than during previous inspections of the firm. Its evaluation of PwC 2004 turned up audit deficiencies at nine of the accounting firm's clients, and the prior year's report listed 30 of PwC's clients that received deficient audits. The PCAOB discourages readers of its inspection reports from drawing any conclusions based on the number of audit deficiencies that are listed. The board's audits are not randomly chosen but are rather risk based — meaning the PCAOB chooses audits it perceives as having difficult issues, and therefore a higher risk of deficiencies. "The total number of audits reviewed is a small portion of the total audits performed by these firms, and the frequency of deficiencies identified does not necessarily represent the frequency of deficiencies throughout the firm's practice," the PCAOB says in its report.
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