Question

Upon inspection, what failures did PCAOB find?

a) Employee satisfaction
b) Inadequate auditor independence
c) Marketing budget overruns
d) Corporate social responsibility

Answer 1

The PCAOB inspects audit firms and may identify failures such as inadequate auditor independence, which compromises an auditor's objectivity. Their inspections ensure auditors follow standards and provide proper evidence for their opinions.

Step-by-step explanation:

The Public Company Accounting Oversight Board (PCAOB) inspects registered accounting firms that audit public companies to ensure the quality of the audit work performed. Upon inspection, one of the failures that PCAOB may find is b) Inadequate auditor independence. This refers to when auditors have a relationship with the client that could impair their objectivity and impartiality. Another area of concern that PCAOB looks for is whether auditors are following the required standards and providing sufficient evidence to support their audit opinions.