PCAOB inspects registered public accounting firms to evaluate compliance with the Sarbanes-Oxley Act, Board rules, Securities and Exchange Commission rules, and professional standards in relating to the company's performance, the issuance of audit reports and other related matters to other issuers, brokers and intermediaries. The law requires the Board to conduct these inspections annually for firms that regularly provide audit reports for more than 100 issuers and at least every three years for firms that regularly provide audit reports for 100 or fewer issuers. As required by law, the PCAOB prepares a written report of each inspection and provides it, in appropriate detail, to the SEC and certain state regulatory agencies. The Council also makes parts of the reports available to the public; However, some information may not be disclosed to the public or disclosure is delayed, as required by law. In reviewing the audits, the inspection team identified issues that it considered to be deficiencies. These deficiencies included the Company's failure to appropriately identify or address errors in the issuer's application of GAAP, including, in some cases, errors that appeared likely to be material to the issuer's financial statements. Additionally, deficiencies included the company's failure to perform, or perform sufficiently, certain required audit procedures. ISSUES/DEFICIENCIES FOUND BY PCAOB: The inspection process performed by PCAOB included reviews of several audits conducted by the company. The problems or deficiencies found are as follows: In this audit, the company failed, with respect to the following aspects, to obtain sufficient and competent corroborating evidence to support its audit opinion: - The company does not have . ..half of paper.... ..the City Audit cannot do enough to ensure that accounting and auditing matters are evaluated with professional skepticism as set forth in the Auditing Standards. The audit team observed that in several cases engagement teams conducted reviews of important areas through statements or suggestions, opinions, results of investigations of management, or management analysis. The auditee's failure to adequately challenge management's statements occurred in several areas, including when the entity evaluates (a) management's estimates and (b) material misstatements of the financial statements and how financial statement users interpret these errors. The audit teams involved did not adequately verify the statements, for example, by reviewing relevant source documentation, consulting external parties, carrying out their own analyzes.