PCAOB find deficiencies in at Grant Thornton US

The Public Company Accounting Oversights Board (PCAOB) found deficiencies in six audits conducted by Grant Thornton in 2017

In its latest inspection report the watchdog reviewed the firm’s work on 34 audits, most of which related to financial years ending 2016.

The number of deficiencies dropped by two since the previous year, in which significant failings were found in eight of the 34 audits inspected.

The PCAOB found that some of these recent deficiencies “were of such significance that the inspection team determined that [Grant Thornton] issued an opinion without obtaining sufficient appropriate audit evidence that the financial statements were free of material misstatement and/or the issuer maintained effective ICFR [internal control over financial reporting]”.

It noted that while this did not necessarily indicate misstatement or material weaknesses in ICFR, that “even when not associated with a disclosed misstatement or previously unidentified material weakness, an auditor’s failure to obtain sufficient appropriate audit evidence is a serious matter”.

The most frequent deficiency found in the audits was a failure to test the design or effectiveness of controls that included a review element selected for inspection by the firm (three instances).

The PCAOB also found failures to sufficiently evaluate compliance with GAAP for one or more transactions or accounts (three instances).

Grant Thornton had failed to “appropriately evaluate control deficiencies” in two instances.

In three of the audits deficiencies were found within areas related to revenue, including accounts receivable.

Two deficiencies were found in relation to business combinations and a further two relating to property, plant and equipment, including oil and gas properties.

In a letter of response, Grant Thornton CEO Michael McGuire and national managing partner of audit services Jeffrey Burgess said they had “carefully considered each of the matters identified in Part I of the Draft Report”.

“Accordingly, we took all steps necessary to fulfil our responsibilities under AS 2901, Consideration of Omitted Procedures after the Report Date and AS 2905, Subsequent Discovery of Facts Existing at the Date of the Auditor’s report.”

They added that Grant Thornton looked forward “to the continuing dialogue as we pursue our shared goals of improving audit quality across the profession and protecting the investing public”.