The Public Company Accounting Oversight Board detailed its findings in an inspection report publicized Friday. By law, the board must review accounting firms that audit 100 or more public companies once a year. The report covered inspections conducted in 2006, and was issued almost seven months after the 2005 KPMG inspection report.

The PCAOB found an instance in which KPMG failed to test the effectiveness of internal controls involving a company's revenue, and cited some problems in the audits of valuation of certain assets. As is its practice, the PCAOB didn't identify the companies whose audits had deficiencies. The board did not mention instances where audit problems led a KPMG client to issue a financial restatement.

"KPMG's primary goal is to serve the capital markets by conducting high-quality audits," KPMG spokeswoman Kathy Fitzgerald said. "The insights from the PCAOB's inspection process contribute significantly to our achieving that objective."

The PCAOB has now issued 2006 inspection reports for three of the Big Four auditing firms. PricewaterhouseCoopers LLP is the only one of the big firms whose 2006 report has yet to be published.