backOn November 7, 2023, PCAOB Chair Erica Williams delivered remarks at the PCAOB’s 15th International Institute on Audit Regulation. Williams focused on the PCAOB’s coordination with its non-U.S. counterparts, rising deficiency rates in inspection reports, and the PCAOB’s “strong” enforcement program.
The PCAOB has inspected “more than 60 non-U.S. firms covering more than 200 engagements,” Williams reported, noting that its oversight of multinational companies and cross-border audits requires communication and cooperation. Williams characterized “audit quality for both domestic and international firms” as trending “in the wrong direction for the second year in a row.” About 40% of audits inspected “will have had one or more deficiencies where the audit firm failed to obtain sufficient appropriate evidence to support its opinion,” which she said was “completely unacceptable.” The deficiency rate for 2022 increased by 6% from 2021, on top of a 5% increase the prior year.
Williams also touted an expanded enforcement agenda, remarking that the PCAOB is expanding how it identifies cases, expanding the types of cases it pursues, and “making sanctions count.” The PCAOB imposed “the highest penalties in PCAOB history” last year, she said, and total penalties to date “are already higher than the total penalties in each of the five years before our record-breaking year in 2022.” Williams explained that “[m]any of those matters involved PCAOB-registered firms located in countries where the PCAOB and the home-country audit regulator have entered into cooperative arrangements,” pursuant to which enforcement staff coordinated with non-U.S. counterparts.
Chair William’s remarks are here.