Audit reports still fall short

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The audit reports of public companies across the world still show a high level of deficiencies, reports the  International Forum of Independent Audit Regulators (IFIAR).

IFIAR’s 2014 Survey of Inspection Findings was released on Tuesday and showed that the highest number of audit inspection deficiencies are in the areas of fair value measurement, internal control, and revenue, which count among the core building blocks of audited financial statements.

For audits of systemically important financial institutions, including global banks and insurers, the survey found the highest number of deficiencies related to auditing of allowance for loan losses and loan impairments, internal control testing, and auditing the valuation of investments and securities.

“We continue to see high levels of inspection deficiencies in vital areas of public company audits,” said IFIAR chair Lewis H. Ferguson, a board member of the U.S. Public Company Accounting Oversight Board. “This is a problem for investors and stakeholders around the world.”

IFIAR’s Report on 2014 Inspection Findings Survey summarized a number of key inspection results from audits of public companies, including systemically important financial institutions, submitted by 29 IFIAR members from around the world.

The results came from inspection reports issued during the members’ most recent annual reporting periods that ended by July 2014.

The 29 IFIAR member countries reporting 2014 inspection findings inspected 948 public company audits and found deficiencies in 47 per cent. Seventeen IFIAR member countries reported 2014 inspection findings on audits of systemically important financial institutions. Those members inspected 148 financial institution audits, of which 41 per cent had deficiencies.

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