The issues by industry in the 2023 PCAOB Inspections for the Big Four

The PCAOB inspection reports for the Big Four firms cover a diverse range of industries, often reflecting sectors with complex financial and reporting requirements. Common industries represented in the inspections include:

1. Financial Services (Banking, Insurance, Investment Management)

   • High complexity in areas like credit loss reserves, investment securities, and fair value measurements.

2. Consumer Discretionary and Consumer Staples

   • Includes retail, manufacturing, and food and beverage, with challenges in revenue recognition, inventory valuation, and goodwill impairment.

3. Information Technology

   • Often involves multi-location audits and issues around intangible assets, revenue from software or services, and internal controls over data systems.

4. Industrials

   • Represents manufacturing and industrial goods companies, with focus areas including inventory management, revenue from contracts, and goodwill.

5. Healthcare and Pharmaceuticals

   • Complexities arise in valuation of intangible assets, revenue recognition, and testing of research and development expenses.

6. Real Estate and Construction

   • Deficiencies in these sectors often relate to fair value measurements, revenue from contracts, and long-term project accounting.

These industry sectors were prioritized in inspections due to the high risks involved in areas like complex financial instruments, revenue contracts, and internal control requirements.