Accounting
PCAOB sees improvements in largest audit firms
The Public Company Accounting Oversight Board’s inspection staff found noticeable improvements in the deficiency rates of the six largest global auditing firms, according to a
In 2024, the PCAOB observed a tangible decrease in Part I.A deficiency rates, on average, across all inspected firms, as well as a substantial improvement, in the aggregate, among the largest firms it inspects annually. The improvement follows increased efforts by the PCAOB to encourage firms to reverse the trend of rising deficiency rates following the pandemic.
“We challenged the audit profession to do better for America’s investors, and these significant improvements demonstrate real progress in protecting investors,” said PCAOB chair Erica Williams in a statement. “Still, our work is far from over, and I urge the audit profession to build on this momentum.”
For all inspected firms, the aggregate Part I.A deficiency rate decreased to 39% in 2024, down from 46% in 2023. For the Big Four U.S. firms (Deloitte, EY, KPMG and PwC), which as of Dec. 31, 2024, collectively audit about 80% of the market capitalization of public companies, the aggregate Part I.A deficiency rate decreased to 20% in 2024, down from 26% in 2023.
The aggregate Part I.A deficiency rate for the six U.S. global network firms (BDO USA, Deloitte, EY, Grant Thornton, KPMG and PwC) decreased to 26% in 2024, from 34% in 2023.
Results at the eight annually inspected U.S. non-affiliated firms held steady, decreasing to 52% in the aggregate in 2024, compared to 53% in 2023 (when the eight inspected firms were Marcum, RSM US, Crowe, Withum, Moss Adams, Baker Tilly US, B F Borgers and Cohen & Company, Ltd., though
Williams has called on firms to improve their audit quality since she became chair of the PCAOB in 2022, and the PCAOB has been focusing on encouraging auditing firms to address their high deficiency rates coming out of the pandemic. Some of the initiatives include publishing more information, resources and tools to help firms improve their audit quality; increasing transparency; engaging regularly with audit firms; providing focused support to smaller firms; publishing implementation guidance for new PCAOB standards; prioritizing guidance and communication regarding remediation submissions for quality control deficiencies; engaging directly and regularly with U.S. audit committees; and increasing the PCAOB’s focus on the effect of firm culture on audit quality.
The PCAOB began seeing
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The House unanimously passed four bipartisan bills Tuesday concerning taxes and the Internal Revenue Service that were all
- H.R. 1152, the Electronic Filing and Payment Fairness Act, sponsored by Rep. Darin LaHood, R-Illinois, Suzan Delbene, D-Washington, Randy Feenstra, R-Iowa, Brad Schneider, D-Illinois, Brian Fitzpatrick, R-Pennsylvania and Jimmy Panetta, D-California. The bill would apply the “mailbox rule” to electronically submitted tax returns and payments to allow the IRS to record payments and documents submitted to the IRS electronically on the day the payments or documents are submitted instead of when they are received or reviewed at a later date. The AICPA believes this would offer clarity and simplification to the payment and document submission process while protecting taxpayers from undue penalties.
- H.R. 998, the Internal Revenue Service Math and Taxpayer Help Act, sponsored by Rep. Randy Feenstra, R-Iowa, and Brad Schneider, D-Illinois, which would require notices describing a mathematical or clerical error to be made in plain language, and require the Treasury to provide additional procedures for requesting an abatement of a math or clerical error adjustment, including by telephone or in person, among other provisions.
- H.R. 517, the Filing Relief for Natural Disasters Act, sponsored by Rep. David Kustoff, R-Tennessee, and Judy Chu, D-California. The process of receiving tax relief from the IRS following a natural disaster typically must follow a federal disaster declaration, which can often come weeks after a state disaster declaration. The bill would provide the IRS with authority to grant tax relief once the governor of a state declares either a disaster or a state of emergency and expand the mandatory federal filing extension under Section 7508(d) of the Tax Code from 60 days to 120 days, providing taxpayers with more time to file tax returns after a disaster.
- H.R. 1491, the Disaster related Extension of Deadlines Act, sponsored by Rep. Gregory Murphy, R-North Carolina, and Jimmy Panetta, D-California, would extend the amount of time disaster victims would have to file for a tax refund or credit (i.e., the lookback period) by the amount of time afforded pursuant to a disaster relief postponement period for taxpayers affected by major disasters. This legislative solution would place taxpayers on equal footing as taxpayers not impacted by major disasters and would afford greater clarity and certainty to taxpayers and tax practitioners regarding this lookback period.
“The AICPA has long supported these proposals and will continue to work to advance comprehensive legislation that enhances IRS operations and improves the taxpayer experience,” said Melanie Lauridsen, vice president of tax policy and advocacy for the AICPA, in a statement Tuesday. “We are pleased to work closely with each of these Representatives on common-sense reforms that will benefit taxpayers, tax practitioners and tax administration and we’re encouraged by their passage in the House. We look forward to continuing to work with Congress to improve the taxpayer experience.”
The bills were also included in a recent Senate
The House also passed two other tax-related bills Tuesday that weren’t endorsed in the recent AICPA letter.
- H.R. 1155, Recovery of Stolen Checks Act, sponsored by Rep. Nicole Malliotakis, R-New York, would require the IRS to create a process for taxpayers to request a replacement via direct deposit for a stolen paper check. If a check is determined to be stolen or lost, and not cashed, a taxpayer will receive a replacement check once the original check is cancelled, but many taxpayers are having their replacement checks stolen as well. Taxpayers who have a check stolen are then unable to request that the replacement check be sent via direct deposit. The bill would require the Treasury to establish processes and procedures under which taxpayers, who are otherwise eligible to receive an amount by paper check in replacement of a lost or stolen paper check, may elect to receive such amount by direct deposit.
- H.R. 997, National Taxpayer Advocate Enhancement Act, sponsored by Rep. Randy Feenstra, R-Iowa, would prevent IRS interference with National Taxpayer Advocate personnel by granting the NTA responsibility for its attorneys. In advocating for taxpayer rights, the National Taxpayer Advocate often requires independent legal advice. But currently, the staff members hired by the National Taxpayer Advocate are accountable to internal IRS counsel, not the Taxpayer Advocate, creating a potential conflict of interest to the detriment of taxpayers. The bill would authorize the National Taxpayer Advocate to hire attorneys who report directly to her, helping establish independence from the IRS.
House Ways and Means Committee Chairman Jason Smith, R-Missouri, applauded the bipartisan House passage of the various bills, which had been unanimously passed by the committee.
“President Trump was elected on the promise of finally making the government work better for working people,” Smith said in a statement Tuesday. “This bipartisan legislation helps fulfill that mandate and makes improvements to tax administration that will make it easier for the American people to file their taxes. Those who are rebuilding after a natural disaster particularly need help filing taxes, which is why this set of bills lightens the load for taxpayers in communities struck by a hurricane, tornado or some other disaster. With Tax Day just a few days away, we must look for common-sense, bipartisan ways to make filing taxes less of a hassle.”
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