A recent Public Company Accounting Oversight Board (PCAOB) staff report, Observations From the Target Team's 2023 Inspections, offers the perspective of inspectors who examine emerging risk areas in public company audits. These inspectors, in several instances, take note of the value of audit firms using experts, according to the Journal of Accountancy.

In the report, the PCAOB noted that the target team inspectors focused on reviewing audits of public companies that included risks in three areas: crypto assets, multilocation audits and significant or unusual events or transactions.

The report offered a view into the target team's inspection results that looked into instances of deficiencies where they based the comment forms, other observations and good practices that they issued.

Established in 2019, this team executes in-depth interviews and review procedures to collect audit firm information. The target team has helped the PCAOB’s mission to protect investors by developing observations about audit firms and communicating those insights to inspected audit firms so they could improve the quality of their audits.

The Journal reported that in all three areas, the "good practices" the inspectors suggested involved recommendations for audit firms to voluntarily ask for assistance from specialists, subject matter experts, consultants and senior team members.

Regarding the deficiencies in the audits that inspectors reviewed for the report, the Journal said that most involved crypto assets, with five areas of concern. The first involved the auditor’s response to the risks of material misstatement: Certain engagement teams did not perform sufficient procedures to address the risk of occurrence related to crypto asset customer revenue transactions.

The second area of concern for crypto involved an audit of internal control over financial reporting that is integrated with an audit of financial statements: Certain engagement teams did not get sufficient and appropriate audit evidence about the design and operating effectiveness of controls over the existence, completeness, valuation, rights and obligations, or presentation and disclosure related to safeguarding crypto assets held on behalf of platform users.

The third area related to audit evidence: The target team noted instances of certain engagement teams that did not perform sufficient procedures over the information used to test certain controls.

The fourth was auditor reporting of certain audit participants: The target team noted instances in the Form AP submitted by the audit firm where participation of certain non-U.S. audit participants was not disclosed appropriately.

Auditor independence was the fifth concern: The target team noted an instance where the audit firm did not perform any procedures to determine compliance with the appropriate U.S. Securities and Exchange Commission and PCAOB standards and rules with respect to independence of certain engagement team members that took part in the audit.