CPA Audit Quality:

A Status Report on the Accounting Profession's Enforcement Efforts

AFMD-88-28: Published: Apr 25, 1988. Publicly Released: May 26, 1988.

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In response to a congressional request, GAO reviewed the accounting profession's enforcement efforts regarding certified public accountants (CPA) who performed poor quality government audits to: (1) determine the result of GAO audit referrals to state boards of accountancy and the American Institute of Certified Public Accountants (AICPA); (2) determine the results of the recent inspectors general (IG) referrals to the state boards and to AICPA; (3) determine the reasonableness of any disciplinary actions; and (4) identify ongoing efforts to improve the enforcement process.

GAO found that the state boards of accountancy and AICPA: (1) had completed action on many of the GAO and IG referrals; (2) took action such as continuing education requirements, reviews, fines, suspensions, and license revocations to educate or discipline CPA licensed in their states; (3) plan to develop programs to improve audit quality in conjuction with IG; (4) generally followed their procedures for investigating referrals; (5) took actions commensurate with audit deficiencies; and (6) completed their enforcement processes without unnecessary delays. GAO also found that the state boards, AICPA, and IG are developing initiatives to improve audit quality by: (1) streamlining the referral process; (2) taking a more proactive role in reviewing CPA work; and (3) temporarily debarring CPA who perform poorly from governmental audits.

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