The Public Company Accounting Oversight Board said that an inspection of the accounting giant from May through November 2004 found that "in some cases, the deficiencies identified were of such significance that it appeared to the inspection team that the firm had not, at the time it issued its audit report, obtained sufficient competent evidential matter to support its opinion on the issuer's financial statements."

The U.S. audit oversight board also noted that Deloitte & Touche had improperly applied lease accounting standards in one audit and that it had come to an inaccurate conclusion about a company's ability to continue as a going concern.

"We have taken appropriate action to address the matters identified by the inspection team for each of the instances identified," said Deborah Harrington, a spokeswoman for Deloitte & Touche. "We are supportive of this process and committed to work collectively to continuously improve the independent audit process."

The audit board was created by Congress in 2002 following a spate of accounting scandals that rocked the U.S. stock markets. Under law, it must inspect the Big Four firms each year. It does not identify any of the public companies alluded to in its inspections reports.

The PCAOB's report did not include details about the quality-control systems at Deloitte & Touche or the "tone at the top." Under law, that information must remain confidential for at least a year. If firms fail to address criticism about their quality controls within 12 months, then the PCAOB may make public its criticisms.

-- Siobhan Hughes (Dow Jones Newswires)

See also: PCAOB Finds 18 KPMG Auditing Flaws