Internal controls, material misstatement assessments and responses, and accounting estimates: these will be the three main inspection priorities of the Public Company Accounting Oversight Board (PCAOB) over the next year, according to a recent staff inspection brief. This is because these are three areas where inspectors have generally found the most errors, and thus the areas that the board feels warrants the most attention. 

The report also shed some light on what factors the board will consider when deciding which audit engagements to inspect in the first place. It noted that audit engagements and areas of inspection focus are not random but, rather, selected based on various risk factors involving things like the issuer's industry or geographic region, the degree to which complex accounting or auditing tasks (e.g. construction contracts or multiple-element engagements) needed to be performed, and the particular audit firm, practice office or partner that did the audit itself, a consideration that will include prior inspection results. 

The PCAOB said it plans to inspect 220 firms total during the next inspection cycle, including 10 U.S. firms that are annually inspected and 60 non-U.S. firms in 25 different jurisdictions.