More on Shedding Light on Audit Deficiencies

Yigal M. Rechtman, CPA, CFE, CITP, CISM, and Hila Fogel-Yaari, PhD, and Kelly Gebhart, MST

Congratulations to the CPAJ on a particularly in-depth May/June 2022 issue. Regarding the authors' response to my letter that was published in that issue, I am happy to see to that the authors (Hila Fogel-Yaari and Kelly Gebhart) of the original article agree—with some caveats—that “on average, 80% of inspected audits have been found to have no deficiencies.” One caveat is worth mentioning: the authors' response is that of the 53 inspections for KPMG, for example, 37 were selected based on high risk of the auditee and that the “20% deficiency rate is likely based on audits that were more suspect to begin with.” Besides being a speculation, it is not making anyone feel better about the audit profession or the stock market, even if it were true. It is not clear how this makes the rate of 20% audit failure (not “deficiency”) any better.