PCAOB Inspection Reports: Understanding their Value and Context
The Public Company Accounting Oversight Board (PCAOB) inspection program plays a key role in strengthening audit quality and promoting confidence in U.S. capital markets. This year’s PCAOB inspection reports showed continued decreases in deficiency rates, indicating that firms are making meaningful progress in addressing issues identified through prior inspections.
As stakeholders review the latest findings in more detail, it is important to understand what these reports are designed to measure. While inspection findings provide meaningful information about how audit firms comply with professional standards and regulatory requirements, they are not intended to serve as a comprehensive assessment of a firm’s overall performance. Viewed in the proper context, inspection reports remain an important tool for understanding and enhancing audit quality.
Viewed in the proper context, inspection reports remain an important tool for understanding and enhancing audit quality.
An Important Accountability Tool
PCAOB inspection reports serve the public interest by identifying audit deficiencies and promoting continuous improvement. Through inspections, the PCAOB evaluates selected audits performed by firms and assesses compliance with auditing standards, rules, and regulations. The results provide valuable learning opportunities, promote accountability, and help advance audit performance over time.
This year’s reports demonstrate the profession’s commitment to continuous improvement, with deficiencies among the six Global Network Firms (GNFs) declining 13% from the previous year.
Beyond individual findings, inspection results often highlight broader themes and opportunities, contributing to stronger audits, more reliable financial reporting, and greater confidence in U.S. capital markets.
Through inspections, the PCAOB evaluates selected audits performed by firms and assesses compliance with auditing standards, rules, and regulations.
Reports Should Be Viewed in Context
While inspection reports provide valuable information, the PCAOB has emphasized that findings should be interpreted in the proper context.
Inspection reports reflect the results of the PCAOB’s review of a selection of audits and are not intended to provide a comprehensive assessment of a firm’s overall performance or serve as a ranking system among firms. Because inspections focus on selected engagements and risk areas, results may not be representative of a firm’s audits overall and may not be directly comparable across firms or from year to year.
It is also important to recognize that a PCAOB deficiency finding does not necessarily mean a company’s financial statements were misstated, that material weaknesses in their internal controls over financial reporting exist, or that investors received inaccurate information. Deficiencies generally reflect situations in which the auditor did not obtain sufficient audit evidence to support its opinion at the time of the audit and rarely lead to restatements. In 2025, only one of the 312 audits reviewed by the PCAOB resulted in a restatement, and the number has been in the single digits in recent years as well.
For these reasons, inspection reports should be considered alongside other relevant information when evaluating audit performance and audit quality, rather than viewed as a standalone measure. This broader perspective aligns with how institutional investors currently evaluate audit performance. According to the CAQ’s institutional investor survey, 80% of investors agreed that audit performance metrics without sufficient context are not adequate to evaluate a specific audit or firm. Investors consider a range of information sources, including audit reports, firm transparency and quality reports, PCAOB inspection reports, and firm reputation.
80% of investors agreed that audit performance metrics without sufficient context are not adequate to evaluate a specific audit or firm.
Looking Ahead: Enhancing the Value of Inspection Reports
The public company audit profession recognizes there are ongoing opportunities to enhance the usefulness of inspection reporting for investors and other stakeholders to continue to promote confidence in the U.S. capital markets.
The CAQ supports an inspection program that remains focused on strengthening audit quality while evolving toward greater consistency, transparency, a stronger focus on firms’ quality control systems, and more decision-useful reporting. We encourage the PCAOB to continue pursuing improvements that enhance the effectiveness, clarity, and comparability of inspection results.
Recent inspection results suggest encouraging progress in several areas reviewed by the PCAOB, but as business environments, technologies, and risks evolve, achieving and maintaining audit quality requires ongoing vigilance. Continued collaboration among regulators, the public company audit profession, and investors can help ensure the inspection program remains an effective accountability tool that strengthens audit quality and supports confidence in U.S. capital markets.
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