The PCAOB recently released the Spotlight: Additional Insights on the Remediation Process . In it, there is a crucial distinction as to what constitutes a repeat or persistent criticism. "A criticism that occurs in Part II of at least two consecutive inspection reports, or that occurs consistently, even if it skips one or two inspection reports, is considered a repeat or persistent criticism. The inspections staff evaluates similar deficiencies, regardless of how these deficiencies have been categorized in Part II in prior inspection reports. For example, if the year subject to remediation included a QCC related to testing assumptions of estimates, and the prior year included a QCC related to testing assumptions of business combinations, the QCC for the subsequent year would likely count as a recurrence because the underlying deficiency in both instances relates to testing assumptions.” It is important that firms do not mistakenly believe that because a quality control criticism is not reported in one inspection, that the finding, if it comes up again, is not a repeat finding. It is imperative that firms focus on similar deficiencies as they prepare for subsequent inspections to ensure that any remediation or monitoring processes have effectively addressed the deficiency. Also, a firm’s timely reactions to any previous ineffective actions will count in its favor. “The Staff Guidance further discusses the fact that strong remediation efforts, particularly when accompanied by effective firm monitoring procedures and timely adjustments, can weigh favorably in the inspection staff’s recommended remediation determination, even if subsequent inspection results indicate recurrences of the same type of deficiency.” The spotlight further mentions that when employing any new tools to address previous deficiencies, it is critical that the firm ensures that the new tools are mandatory and that its teams are using them effectively. Additionally, as firms develop remediation training programs for teams, the spotlight outlines important aspects to be included that firms may lose sight of. To read the full spotlight please visit the PCAOB’s website by clicking here .

Compliance is definitely the main driver of the new System of Quality Management (SQM) standards issued by the IAASB or the drafted standards from AICPA and the PCAOB. There is no disputing that. However, for the early adopters, what we are finding is that there are immense amounts of business value that come out of this process; more if you actually start the process with business value in mind. Given that firms are all in various stages preparing for the go-live date of controls operating on December 15, 2022, we thought it would be helpful to lay out the strategic value drivers from this compliance exercise. Related: See a breakdown of the various implementation dates here . SQM implementation requires firms to take a closer look at their internal process; every process that touches the value chain of getting an audit done.