Valuation Issues, Auditor Fraud, and PCAOB Confirmation: Findings From an Analysis of Lawsuits Against Large Public Accounting Firms.

This article analyzes allegations in over 200 lawsuits filed against the largest public accounting firms, focusing on the nature of claims and their implications for the profession. Key findings reveal that errors related to Generally Accepted Accounting Principles (GAAP), particularly valuation issues involving complex asset estimations, dominate allegations more than Generally Accepted Auditing Standards (GAAS) errors. Fraud allegations are prevalent, notably including a significant number of claims against auditors themselves, a topic often overlooked in prior research. Additionally, reports from the Public Company Accounting Oversight Board (PCAOB), which inspects audit firms, corroborate these findings by highlighting valuation deficiencies and provide a potential resource for future legal claims. The study underscores ongoing legal risks faced by large accounting firms, especially in the financial and technology sectors, and suggests that these challenges continue to affect the profession's credibility and financial stability.