Audit Deficiency Rates Fall in 2025 PCAOB Review
The Public Company Accounting Oversight Board reports a decline in audit deficiencies compared to previous years.
Updated on Oct. 26, 2026 in Public Companies
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The Public Company Accounting Oversight Board reported that the overall audit deficiency rate in the United States dropped to 23% in 2025. This marks a significant decline from the 38% rate observed in 2024 and the 46% rate recorded in 2023.
Why it matters
The consistent downward trend in deficiencies suggests improved audit quality across the industry, bolstering confidence in financial disclosures for investors. These inspections are essential for maintaining oversight of firms responsible for auditing public companies.
The PCAOB reviewed 780 audits across 143 firms during the 2025 inspection cycle. Big Four firms, which audited 80% of U.S. market capitalization as of December 31, 2025, posted an 8% deficiency rate.
The players
Public Company Accounting Oversight Board
The PCAOB is a private-sector, nonprofit corporation created by the Sarbanes-Oxley Act to oversee the auditors of public companies.
The details
Staff inspectors focused on quality control measures, accountability frameworks, and the integration of technology within the auditing process. While overall performance improved, the estimated deficiency rate for non-U.S. global network firms rose to 26% from 24% in 2024.
Timeline
2023: Overall audit deficiency rate was 46%.
2024: Overall audit deficiency rate was 38%.
December 31, 2025: Date Big Four firms reached 80% market capitalization audit coverage.
2025: Overall audit deficiency rate was 23%.
October 22, 2026: The PCAOB staff report was published.
Market Landscape
The PCAOB reporting process functions as a core oversight mechanism established under the Sarbanes-Oxley Act, extending the regulatory framework for public company audits. Regular inspection cycles force firms to compete on audit quality to maintain their status as lead auditors for major public entities.
Improved audit quality helps protect retail investors by reducing the risk of material financial misstatements in public company filings. Shoppers and shareholders can have greater confidence that the financial health of the companies they support is being verified by rigorous standards.
The takeaway
Investors should continue monitoring individual firm inspection reports to identify specific risks in financial reporting. Greater focus on quality control and technology in audits remains a critical indicator of long-term corporate transparency.
Further reading
For broader trends in corporate oversight, see the Public Companies section.
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Do you trust that recent improvements in corporate audit quality effectively protect your financial interests?
