In our 400th episode, Blake and David dive into the controversial world of audit quality and Big Four accounting firms. They also discuss a listener's critical email about their audit coverage, explore recent audit failures and deficiencies, and debate the underlying incentives in the audit industry. The discussion turns to workplace culture issues at major firms and potential solutions to improve audit quality.

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Chapters

(01:05) - Listener Email: Criticism of Audit Discussions
(01:59) - Reading and Responding to Connor's Email
(05:19) - Understanding Audit Deficiencies
(07:46) - Audit Quality and Deficiency Rates
(13:26) - EY's Audit Deficiency and Industry Comparison
(15:28) - The Business Model of Big Four Firms
(19:13) - Challenges in the Audit Profession
(19:39) - Listener Feedback and Commentary
(35:33) - Super Micro Accounting Scandal
(43:53) - AI's Impact on Auditing
(44:11) - The Tipping Point: Media Coverage and Reactions
(44:40) - Audit Issues and Historical Context
(46:10) - The Role of Consulting in Audit Firms
(48:04) - Materiality and Audit Quality
(51:32) - The Future of Auditing and AI
(53:16) - EY's Secret Drinking Club Controversy
(01:15:35) - Addressing the CPA Crisis
(01:19:10) - Listener Mail and Final Thoughts

Show Notes

PCAOB Posts 2023 Annual Inspection Reports Alongside Staff Observations and New Charts To Boost Transparency

https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-posts-2023-annual-inspection-reports-alongside-staff-observations-new-charts-to-boost-transparency

Super Micro: Fresh Evidence Of Accounting Manipulation, Sibling Self-Dealing And Sanctions Evasion At This AI High Flyer

https://hindenburgresearch.com/smci/

AI Spotted Super Micro Risks Two Years Before Filing Fiasco

https://www.forbes.com/sites/noahbarsky/2024/08/30/ai-spotted-super-micro-risks-two-years-before-filing-fiasco/

EY's PR nightmare: A ‘secret drinking club’, misconduct allegations and resignations

https://www.stuff.co.nz/nz-news/350292387/eys-pr-nightmare-secret-drinking-club-misconduct-allegations-and-resignations

Super Micro shares fall 19% on filing delay, Hindenburg Research report

https://www.cnbc.com/2024/08/28/super-micro-shares-fall-23percent-on-filing-delay-hindenburg-research-report.html

Who Wants to See How Much Big 4 Revenue by Service Line Has Changed Since SOX?

https://www.goingconcern.com/who-wants-to-see-how-much-big-4-revenue-by-service-line-has-changed-since-sox/

PCAOB releases two new, divergent inspection reports for Canadian accounting firms

https://www.canadian-accountant.com/content/practice/pcaob-inspection-reports-deloitte-kreston-gta

Rethinking Rankings: The Top 100 Firms — Adjusted

https://www.vision.cpa/blog/Rethinking%20Rankings:%20Revenue%20Per%20Employee

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Transcripts

The full transcript for this episode is available by clicking on the Transcript tab at the top of this page

Why EY Has The Worst Big Four PCAOB Deficiency Rate

The Accounting Podcast