Audit quality failures don’t only lead to regulatory fines — they also destroy client relationships, damage firm reputations, and cost millions in revenue loss. And yet, some accounting firms are still using outdated systems to manage audit engagements, putting them and their clients at risk.
The Public Company Accounting Oversight Board (PCAOB) reported finding deficiencies in nearly half of all audit engagements inspected in 2023. The Big Four collectively maintained a deficiency rate of approximately 26% in recent years, with individual firms experiencing rates ranging from 18% to 37%. And the PCAOB’s 2024 inspections revealed personal independence violations and breakdowns in quality control systems for independence monitoring. PCAOB Chair Erica Williams has been unequivocal in her assessment, calling these results “unacceptable” and demanding immediate action.
Although results are trending better for 2025, the numbers still need improvement. Firms will need to transform their compliance infrastructure and processes before the costs become unsustainable.
The risks of traditional methods
Traditional compliance management creates several challenges for firms that undermine efficiency and profitability. For one, outdated legacy systems drain significant time and resources to maintain. Plus, since most legacy systems don’t connect with one another, they create data silos, making it difficult for professionals to proactively identify and resolve compliance issues before they become major problems.
Decentralized compliance practices also present a risk for firms. Different offices and practice areas often apply varying compliance standards when handling engagements — for example, one practice area might have rigorous intake procedures, while another relies on informal partner judgment. Without strict guidelines in place, your firm can’t ensure consistent, compliant audit engagements for all clients.
Manual processes are another factor that hinder efficiency and profitability. Professionals spend hours on independence confirmations and compliance and risk assessment documentation — time that could be better spent building client relationships or working on high-value engagements.
And, many firms still monitor independence through manual attestations, meaning they can’t catch violations in real time. By the time an annual attestation reveals that an employee purchased stock in an audit client six months ago, the engagement is already compromised, and your firm must spend time and money remediating the situation.
Financial fines and reputational damage
Audit quality failures and PCAOB enforcement actions carry substantial fines, with higher penalties for repeat offenders and egregious violations. Firm professionals are then pulled away from critical work to respond to regulatory inquiries, document remediation efforts, and implement corrective actions. For a firm with multiple inspection findings, the productivity drain can reach into the millions annually.
But regulatory fines are only one cost. In a profession grounded in trust and credibility, reputational damage poses an equally serious threat.
When inadequate inspection findings become public, it erodes confidence across your entire client portfolio. Current and prospective clients may choose to move their business to a competitor with a stronger, more reliable quality record — regardless of your technical expertise or relationship history — potentially costing your firm millions in recurring annual fees.
Beyond immediate revenue loss, departing clients take their networks with them — erasing years of relationship-building and closing doors to referral opportunities that could have brought in additional business.
Your firm’s reputation also affects its ability to attract and retain talent. Top accounting graduates and experienced professionals want to work at firms known for quality and excellence, not inspection failures. If your firm doesn’t meet their expectations, these high performers won’t hesitate to find opportunities elsewhere.
The compounding costs of compliance gaps
The total cost of audit quality failures is staggering — for major accounting firms, the annual impact easily reaches into the tens or hundreds of millions when you account for:
- Regulatory fines and remediation expenses
- Partner and senior staff time diverted from billable work
- Revenue lost from client terminations and lost opportunities
- Competitive disadvantages in pitches and talent acquisition
- Operational inefficiency from manual, decentralized processes
- Technology debt maintaining outdated systems
Traditional compliance management simply cannot handle the complexity, scale, and speed demands of modern audit practice. Manual tracking processes can’t easily flag independence issues, while decentralized systems can’t manage your firm’s multidimensional relationships and regulatory nuances.
To manage this complexity and protect against escalating costs, your firm needs a modern compliance platform that automates manual processes, eliminates silos, and protects both your bottom line and your reputation.
A modern solution to a growing problem
A centralized, AI-powered platform can provide your firm with the visibility and insights it needs to identify and resolve conflicts. By unifying firm, client, and third-party data, the AI platform can quickly analyze this information and flag potential conflicts — increasing your firm’s risk assessment accuracy.
AI can also recognize and flag trends to help your teams make more strategic decisions. For example, it may identify certain industries or clients that represent risk concentrations, allowing your teams to make faster, more confident decisions about which clients to accept and retain.
And, an AI-powered platform can streamline risk processes and enforce firm and client requirements to improve consistency and compliance across the organization. This helps your firm enhance client satisfaction, preserve valuable client relationships, and protect millions in revenue annually.
The time for change is now
Regulators aren’t just looking at individual engagement deficiencies anymore. They’re scrutinizing your entire system of quality management: the processes, controls, and infrastructure that govern how your firm approaches risk across all engagements.
By investing in integrated accounting compliance software, your firm can meet these heightened standards efficiently, transforming regulatory compliance from a burden into a competitive advantage.
Ready to turn compliance risk into revenue opportunity? Request a meeting to learn how your accounting firm can protect revenue, accelerate client onboarding, and strengthen audit quality with Intapp’s integrated risk management solutions.