By: Cydney Posner
The PCAOB has issued a 2003 Limited Inspections Report of the Big Four accounting firms. Click here for release. The inspections examined compliance, quality control and selected public-company audits. In the inspections, the Board identified significant audit and accounting issues that were missed by the firms and identified concerns about significant aspects of each firm's quality controls systems. The Washington Post reported that accounting "scholars" and industry experts said they were surprised at their thoroughness of the reports. The Post also reported that the most common problem cited relates to "how public companies treat credit agreements on their books. Inspectors said that across each of the four firms, auditors mistakenly allowed some client companies to classify certain debts as long-term rather than as current liabilities. That 'serious error' helps companies understate current obligations and overstate working capital, according to George Diacont, the accounting board's director of registration and inspections." The Post also reported that 20 companies restated their financial statements based on debt issues the inspectors found.