Report Examines Downturn’s Impact on Audits of Financial Institutions
The PCAOB on Wednesday released a report that looks at risks and challenges the economic downturn created for audits of financial institutions and other companies.
“This report provides illustrative examples of the kinds of issues our inspection program has uncovered during the past three years as a result of the impact of the economic crisis on the work of auditors,” PCAOB Acting Chairman Daniel L. Goelzer said in a press release.
Issues discussed in the report include fair value measurements, impairment of goodwill, indefinite-lived intangible assets, and other long-lived assets, allowance for loan losses, off-balance-sheet structures, revenue recognition, inventory and income taxes. It also touches on making improvements to quality-control systems.
The report covers aspects of inspections the PCAOB conducted during the 2007 through 2009 inspection cycles, which generally involved reviews of audits of issuers’ fiscal years ending in 2006 through 2008. The majority of the inspection observations discussed in the report were identified by inspectors during the 2009 inspection cycle and included in 2009 inspection reports, which were issued by the PCAOB in 2010.
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