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Review of audits finds deficiencies on the rise

A recent review of audits found deficiencies are on the rise.

Over the last few years, some negative trends have emerged in the auditing industry, according to a new

Over the last few years, some negative trends have emerged in the auditing industry, according to a new analysis from CPA firm Acuitas, titled "Survey of Fair Value Audit Deficiencies."

For the report, Acuitas Managing Director Mark Zyla sifted through a significant number of recent inspections conducted by the Public Company Accounting Oversight Board. One trend he discovered was that the percentage of audits with deficiencies has more than doubled since 2009. Roughly 64 percent of these deficiencies were related to the testing of managements' prospective financial information, while slightly less than half were attributable to inadequate testing asset prices provided by outside pricing services.

In total, PCAOB discovered deficiencies with 36 issuers during 2009, but cited 79 issuers for deficiencies during 2010, the report found. The 2010 numbers account for 31.6 percent of all audits reviewed.

"The information contained in the survey should benefit public entities and their auditors, and by extension, private entities and their auditors, by helping them understand the underlying causes of fair value measurements and impairment audit deficiencies, as reported by the PCAOB in their latest inspection reports," Zyla said.