Internal Audit & Control

A recently released staff report from the Public Company Accounting Oversight Board (PCAOB) has brought to light a concerning trend in audit deficiencies related to engagement quality reviews (EQRs). According to the report, in 2022, 42% of the firms inspected by the PCAOB received quality control criticisms linked to EQRs, marking a notable increase from 37% in 2020. The report, titled "Inspection Observations Related to Engagement Quality Reviews," emphasizes the importance of the EQR process, where an independent reviewer assesses significant judgments made by the audit engagement team.

The Financial Reporting Council (FRC) in the United Kingdom has announced a £21 million ($26 million) fine against KPMG, one of the Big Four accounting firms, in connection with multiple shortcomings in its audit of the now-defunct construction giant Carillion. The company's collapse in 2018 had profound implications for the British economy, leading to a financial crisis.

A comprehensive survey conducted by the Internal Audit Foundation, part of The Institute of Internal Auditors (IIA), has shed light on the prevailing concerns of internal audit leaders across the world. The report, titled "Global Risk in Focus," gathered insights from internal audit leaders spanning Africa, Asia Pacific, Europe, Latin America, the Middle East, and North America to identify and analyze the most prominent risks affecting their respective regions.

The Financial Conduct Authority (FCA) has taken decisive action against London Court Ltd, imposing stringent restrictions on the firm's ability to conduct regulated activities for new clients and new investments. The restrictions follow concerns raised by the FCA regarding inadequate systems and controls within the company, particularly concerning its My Investment Hub platform.

Amidst economic challenges, London-based Atomico secures impressive funding.

The Securities and Exchange Commission (SEC) has announced charges against Prager Metis CPAs, LLC, and its affiliated California professional services firm, Prager Metis CPAs LLP, collectively known as Prager. The charges stem from allegations of violations of auditor independence rules and aiding and abetting their clients' violations of federal securities laws.

The Public Company Accounting Oversight Board (PCAOB) has taken a significant step in safeguarding investors by adopting a new standard that strengthens and modernizes the auditor's use of confirmation. The confirmation process involves verifying information related to financial statement assertions with third parties. The updated standard is a vital response to changes in technology, communication methods, and business practices since the interim standard's initial adoption by the PCAOB in 2003, following issuance by the AICPA in 1991.