Webinar: Providing Transparency over the PCAOB Inspection Process: The Perspective of Former Inspectors

Part of the Lubar Research Seminar Series

Speaker: Kim Westermann, Cal Poly San Luis Obispo  

While the inspection process is the PCAOB’s key regulatory tool, the lack of publicly available information limits the public’s ability to evaluate its efficacy. To provide transparency over this process, we interview 25 former PCAOB inspectors about the engagement-level inspection process of global network firms. We develop a framework that outlines the process in the following three phases: preparation, execution, and resolution. Across these phases, we provide important in-depth insights that are new to the accounting literature inclusive of issuer and focus area selection, inspection planning and execution, comment form identification, report issuance, and remediation. We also reveal flaws in the process as perceived by inspectors, such as the insufficiency of inspections training and variance in the application of auditing standards across global network firms, national audit firms, and international firms. We discuss implications for investors, regulators, and lawmakers, as well as important topics and questions for future academic research.

Zoom link