Tags: PwC | audit | criticize | U.S.

Audit Watchdog to Criticize PwC

Thursday, 07 Mar 2013 12:14 PM

The U.S. board that regulates corporate auditors is expected to release a report soon criticizing quality controls at accounting firm PricewaterhouseCoopers , according to an internal PwC memo obtained by Reuters.

The report from the Public Company Accounting Oversight Board will fault PwC for not promptly addressing quality control problems found during inspections of some of its 2007 and 2008 audits, according to the memo, dated March 7 and signed by PwC's U.S. chairman, Robert Moritz.

In the memo, PwC defended its efforts to improve quality controls and said it was disappointed with the watchdog's report. It said the PCAOB's criticisms "relate to some of the most complex, broad, judgmental and evolving areas of auditing."

Spokeswomen for PwC and the PCAOB declined to comment on the memo.

Only once before has the PCAOB made public a report criticizing quality controls at a Big Four audit firm. In October 2011 it faulted Deloitte for not doing enough to promptly improve audit quality systems.

Deloitte, PwC, KPMG and Ernst & Young are the four largest corporate auditing firms, dominating the auditing market worldwide.

The PCAOB was formed by Congress in 2002 after accounting scandals at several large corporations, including Enron Corp. Before the board was founded, the audit industry was self-regulating. Now it answers to the PCAOB.

The board inspects major audit firms every year and reports on problems found in individual audits. Criticism of the firms' overall quality procedures are kept private if they are corrected within 12 months of an inspection report.

© 2015 Thomson/Reuters. All rights reserved.

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