Big Four Bullish on Audit Quality as Inspections Show Gains

For much of the last decade, the Big Four accounting firms fell well short of an A grade on their annual regulatory reviews—a report card that has raised concerns about whether audit quality truly improved since the collapse of Enron and WorldCom.

The firms boosted those marks on their two most recent reviews, however, in a sign that they are poised to break through what has been a stubborn plateau in audit inspections results. Inspections serve as a key tool to ensure auditors are providing an effective check on management and that investors can rely on financial statements issued by ...