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PCAOB Annual Check-up Of Audit Firms Says “Health” Of Audits Deteriorating

The PCAOB ensures that public accounting firms abide by the standards and perform quality audits. It conducts inspections of audits as a powerful tool to establish the same. The latest report, known as the “PCAOB Annual Audit Firm Check-Up,” aggregates observations from the inspection of 157 audit firms and reviews portions of 710 audits. This report revealed an alarming upward trend in audit deficiencies in the year 2022 as compared to 2021 and 2020. Some deficiencies highlighted are so significant that they raise doubts about the sufficiency of appropriate audit evidence, while some emphasize non-compliance with standards.

AS 1105, an auditing standard, explains audit evidence and the procedures to ensure its sufficiency. Audit firms must incorporate the suggested best practices from the PCAOB Annual Audit Firm Check-Up to establish the sufficiency of audit evidence.