PCAOB Issues Publication on Root Cause Analysis

The PCAOB has released a spotlight publication that addresses the importance of root cause analysis (RCA) to enhancing audit quality. RCA can be defined as a system “predicated on the belief that a problem is best solved by attempting to address, to correct, or to eliminate fundamental cause(s) of the problem.” In addition to outlining general RCA-related considerations, the publication (1) summarizes observations regarding audit firms’ RCA processes that the PCAOB has noted during its inspections of such firms and (2) lists key questions for audit firms to consider when assessing the effectiveness of their RCA.