Professional Services Monitor: Today

CFO.com today reports on an analysis of PCAOB inspection reports made by a pair of academics from the Hong Kong University of Science and Technology. Some key findings include:

• Negative PCAOB report do not impact a firm’s market share.
• The way PCAOB conducts its inspections makes meaningful conclusions on a firm’s overall quality difficult.
• The AICPA peer review system still has merits because of its summation of overall audit firm quality.

As a former auditor himself in the U.K. offices of KPMG, Lennox has long been reviewing the scrutiny the audit firms receive from the peers and, now, the PCAOB. He believes the current level of scrutiny is appropriate, but that the PCAOB’s current methods are not giving a full picture of each firm’s “future quality.”

While that leaves the auditors’ clients without the information they may need to feel confident in their external auditor, Lennox’s research affirms that the reports are leading to improvements in quality regardless.