The Public Company Accounting Oversight Board (PCAOB) has reported a significant improvement in audit quality for US-listed companies in 2024, following its crackdown on audit firms through tougher standards and steeper fines. The findings mark a reversal of the negative trend that began during the Covid-19 pandemic, according to new data cited by the Financial Times.
Audit Deficiencies Drop Across the Industry
The PCAOB’s latest inspections found flaws in 39% of audits in 2024, down from 46% in 2023. Among the Big Four accounting firms—which audit 80% of US-listed companies—the deficiency rate dropped to 20%, an improvement from 26% the previous year.
Deloitte claimed the top position, with only 14% of its inspected audits failing to meet quality standards, down from 21% in 2023. PwC followed closely with a 16% deficiency rate, slightly improving from 18%.
EY continued to rank worst among the Big Four, but still showed improvement, reducing its deficiency rate from 28% after investing in new technology and standardized processes.
The mid-market accounting firms also improved, though some still face significant challenges. BDO, which had an 86% deficiency rate in 2023, managed to lower that to 60% after implementing stricter internal audit oversight.
Regulatory Pressure and Industry Pushback
PCAOB chair Erica Williams hailed the results as a vindication of the regulator’s aggressive stance, saying:
“We challenged the audit profession to do better for America’s investors, and these significant improvements demonstrate real progress. Still, our work is far from over.”
However, the PCAOB’s approach has not been without controversy. Large accounting firms have accused Williams—appointed under President Joe Biden—of ignoring their concerns over new regulations. Some critics argue that PCAOB inspections focus on the most complex audits, making them an unreliable measure of overall audit quality.
Additionally, political changes have repeatedly reshaped the PCAOB. Under past administrations, the board has been replaced within months, and Donald Trump’s first administration even attempted to dismantle the agency entirely.
Despite the pushback from auditors, the PCAOB has urged corporate boards to use its reports when deciding which audit firms to hire—further pressuring accounting firms to maintain higher quality standards.
