Accounting Restatements Arising from PCAOB Inspections of Small Audit Firms

Dana Hermanson, Kennesaw State University
Richard W. Houston, University of Alabama - Tuscaloosa
Zhongxia Ye, Kennesaw State University


The article presents an analysis made by authors of PCAOB small firms inspection reports in order to examine the types of accounting restatements triggered by PCAOB inspections of small audit firms. The PCAOB Inspection Process is elaborated. The result of the analysis of the authors of PCAOB-triggered restatements by clients of small audit firms reveal that complex, technical accounting areas account for the majority of restatements. Particular attention to unique, complex and accounting issues is encouraged for issuers and small audit firms.