We are inspected by the PCAOB annually because we audit more than 100 US public companies. In those inspections, the PCAOB reviews portions of audit work we performed and aspects of our Firm’s quality control system. Because its inspections are designed to identify deficiencies in audit work, the PCAOB cautions that its inspection reports are not intended to serve as balanced report cards or an overall rating of the quality of the audits performed by a firm.
Part I of the PCAOB report
The improvement in our PCAOB inspection results reflects the actions we have taken in recent years to enhance audit quality, but we recognize that we have more work to do. The table below does not include results from the 2016 inspection cycle, which generally covers our audits of 2015 financial statements, because the results were not available at the time we issued this publication.
|Inspection year||Fiscal year of audits inspected (generally December)||Number of inspected audits|| Number of audits identified in |
Part II of the PCAOB report and status of inspection reports
This nonpublic section of the PCAOB’s inspection report provides observations on a firm’s system of quality control.
The 2015 inspection report that was issued in November 2016 is the only open report. The PCAOB is currently reviewing our final response, which we filed in October 2017.
We participate in the American Institute of Certified Public Accountants peer review program that requires a review every three years of our system of quality control for our private company audit practice. KPMG performed our latest review (reviewing primarily audits for the year ended 31 December 2015) and issued a report in December 2016 with a pass rating.
The International Forum of Independent Audit Regulators (IFIAR) has established a target for the six largest global network audit firms to reduce the number of audits with at least one significant finding as reported by the nine members of IFIAR’s Global Audit Quality Working Group by at least 25% over four years. For the US, the period ends with the 2017 inspection cycle, which is in progress now. While those results will not be available until next year, the EY global network is on track to achieve this commitment.