PCAOB inspectors are taking a close look at three general areas during their inspections of registered auditors in 2015, according to a brief published by the board's staff.
During the 2015 inspection cycle, which is underway, inspectors are looking closely at the following areas, where they have found significant deficiencies during the past several years:
- Auditing internal control over financial reporting.
- Assessing and responding to risks of material misstatement.
- Auditing accounting estimates, including fair value measurements.
Inspectors also consider the current economic environment and related developments in their reviews, according to the PCAOB. In 2015, these will include the high volume of mergers and acquisitions; the search for higher-yielding investment returns in a low-interest-rate environment; and the recent fluctuation in oil prices and its varying effects on the financial reporting risks of different industries.
The PCAOB will inspect about 220 audit firms in 2015, which is in line with the number of firms inspected in 2014. About 60 of the firms inspected will be non-U.S. firms in about 25 jurisdictions.