The Sabarnes-Oxley Act and PCAOB

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PCAOB inspects registered public accounting firms to assess compliance with the Sarbanes -Oxley Act , the rules of the Board, the rules of the Securities and Exchange Commission , and professional standards in relation to the performance of the firm , issuance of audit reports, and related matters other issuers , brokers and dealers .

The Act requires the Board to carry out these inspections annually to companies that regularly provide audit reports for more than 100 issuers and at least every three years for companies that regularly provide audit reports for 100 or less emitters .

As required by law, the PCAOB prepares a written report of each inspection and provides , in detail appropriate for the SEC and certain state regulatory agencies . The Council also makes parts of the reports available to the public ; However, certain information is restricted from public disclosure , or disclosure is delayed, as required by law.
In reviewing the audits, the inspection team identified matters that it considered be deficiencies. These deficiencies included failures by the firm to identify or appropriately address errors in the issuer's application of GAAP, including, in some cases, errors that appeared likely to be material to the financial statements of the issuer. Furthermore, deficiencies included failures by the firm to perform, or to perform sufficiently, certain necessary audit procedures.
ISSUES/FAILINGS FOUND BY PCAOB:
The inspection procedure carried out by PCAOB included reviews of several audits conducted by the firm. The issues or failing being found are as follows,
In this audit, the Firm failed in the following respects to obtain sufficient competent corroborating evidence to support its audit opinion -
The firm did not ...

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...ity control can not do enough to ensure that accounting and auditing issues are evaluated with professional skepticism as envisaged in the auditing standards. The inspection team noted that in several cases the engagement teams ' to important areas of the audit consisted of statements or suggestions opinions, findings of inquiries of management or management analyses. The failure of the audited company to appropriately challenge management representations occurred in several areas, even when the firm evaluates the estimates of (a) administration and ( b ) the material misstatements of the financial statements and how users of financial statements interpret these misstatements. Engagement teams involved did not check the representations properly, for instance, reviewing relevant source documentation, consulting external parties, carrying out their own analyses.

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