Omitted Procedures and Subsequently Discovered Facts—Internet Exercise. From the “Inspections” section of the PCAOB’s website, access the most recent inspection reports for each of the Big Four firms (Deloitte, EY, KPMG, and PwC). Each inspection report contains the following information:

• An introductory preface.

• Inspection procedures and observations, which include specific findings related to issuers (clients) (Part toissuers (clients) (Part I).

• A summary of the inspection process (Appendix B; note that Parts II, III, and Appendix A are not publicly available).

• The firm’s response to the inspection report (Appendix C). Occasionally, the PCAOB’s inspection process identifies situations in which necessary audit procedures were not performed or in which the auditors did not identify departures from GAAP.

Required:

a. What is the auditors’ responsibility with respect to subsequently discovered facts and omitted procedures?

b. If one is provided, review and briefly summarize the firm’s response to the inspection report (Appendix C). Comment on whether you believe the firm’s response to omitted procedures and subsequently discovered facts was consistent with generally accepted auditing standards.