Quality control criticisms and the related evaluation of firm’s remedial actions to address those criticisms are central to the Board's efforts to drive improvement in audit quality.
Part II of PCAOB inspection reports includes criticisms of, and potential defects in, a firm’s system of quality control, to the extent any are identified. When PCAOB inspection reports are first issued, the public will not see Part II of the reports. If a firm does not address to the Board’s satisfaction the criticisms of, and potential defects in, the firm's system of quality control within 12 months after the initial issuance of our report, those criticisms will be made public.
Staff Guidance Concerning the Remediation Process
The PCAOB staff provided guidance on considerations that the inspections staff has identified as relevant to its recommendations to the Board concerning the sufficiency of firms' remediation efforts.
Spotlight: Additional Insights on the Remediation Process
Based on extensive experience with remediations of quality control criticisms contained in inspection reports, this publication discusses key factors that the PCAOB staff considers in remediation – including how the staff evaluates the design of training programs, the staff’s expectations on the timing of remediation implementation, and more – in connection with the staff’s development of recommendations to the Board on firm remediation efforts. This Spotlight reflects the staff’s current remediation program, as well as previous Board and staff guidance documents.
Firms That Failed to Address Quality Control Criticisms Satisfactorily
The PCAOB provides a list of firms that did not address certain quality control issues to the satisfaction of the Board within 12 months and the public version of each firm’s respective inspection report.