Tuesday, July 14, 2009

PCAOB Continues Sadistic Treatment of Accounting Firms' Audits: BDO Edition

Earlier we gave you the lowdown on Good Grant Thornton Times courtesy of the PCAOB. As promised, we're back with the OB's inspection report on everyone's favorite Teflon firm, BDO.

According to CFO, BDO's main problems appear to be with documentation and actually doing work, "According to the reports, the shortcomings were usually based on a lack of documentation and persuasive evidence to back up audit opinions."

Translation: Basically BDO may or may not have actually done the work they said they did but didn't bother creating workpapers that show that they actually did the work. The PCAOB is not down with just an auditor's good word.

Some poor audit associate probably spent 36 straight hours of auditing but didn't bother creating the workpaper. And, similar to the GT case, the managers and partners were apparently still cool with it.

There are other situations where the Peek-at-Boobs thought that BDO just decided they weren't going to do the work including "channel stuffing" and misstatements due to possible fraud (not really a problem these days anyway).

BDO took the criticism better than GT though, saying, "an inherent part of our audit practice involves continuous improvement." They figured that they were pushing their luck after dodging the Banco Espirito bullet.
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