Big Four rapped for auditing errors

THE Big Four accounting firms - Ernst & Young, PricewaterhouseCoopers, KPMG and Deloitte - made repeated mistakes in their auditing of US companies, a new watchdog has reported.

The Public Company Accounting Oversight Board (PCAOB) said its inspections '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'.

However, chairman William J McDonald added: 'None of our findings has shaken our belief that these firms are capable of the highest-quality auditing.'

The audit of the auditors forced 20 restatements - most of which involved the classification of company debt.

Reacting to the report, the Big Four issued statements that, in the main, welcomed the inspections and were committed to improvements.

The Securities and Exchange Commission's chief accountant, Donald Nicolaisen, said he was disappointed with the findings but added: 'It is important to keep in mind that this is the first inspection that covers a period during which the firms were undergoing significant change.'