Audit committees: repeated certification errors are red flags
Regulatory inspections are flagging recurring certification errors after auditor reports — a governance shortfall that signals insufficient board-level review of financials and controls reported.
A jump to a 40% deficiency rate in PCAOB’s 2022 inspections (cooleypubco.com) prompted SEC Chief Accountant Paul Munter’s Feb. 5, 2024 statement calling for “rigorous professional skepticism” from auditors. (sec.gov) The PCAOB published 2024 inspection reports for the six global network firms on March 31, 2025, noting that 26% of inspected Big Four engagements had Part 1.A deficiencies in the 2023 cycle. (auditupdate.com) The PCAOB explicitly criticized Ernst & Young for recurring quality-control failures in a report made public in March 2025, marking the third consecutive inspection to find the same firm-level weaknesses. (tax.thomsonreuters.com) Canada’s CPAB interim results through Sept. 30, 2025, flagged repeat observations across inspected audits and signaled its full annual results would appear in the March 2026 report. (cpab-ccrc.ca) PCAOB staff’s December 2024 priorities document included a new set of questions aimed directly at audit committees about planning, fraud risk, use of specialists and substantive testing. (pcaobus.org) Paul Munter’s guidance listed concrete audit-committee expectations—frequent engagement with auditors, refusal of “truncated” management presentations, and insistence on documented remediation timelines—language echoed in governance guidance for 2026 from NACD. (thecorporatecounsel.net) The PCAOB also levied enforcement and monetary sanctions in 2025, including roughly $8.5 million in penalties across Dutch network affiliates announced in June 2025, underscoring regulatory consequences for persistent control failures. (cpapracticeadvisor.com)
