Accounting giant Deloitte & Touche has been savaged by the Public Company Accounting Oversight Board for shortcomings in its handling of clients' books.

The PCAOB report makes interesting reading and the problems it reveals are pretty mind-boggling.

It found, for example, that Deloitte had failed to detect errors that "significantly overstated" the potential tax benefits to an audit client. It also found that the firm had failed to include evidence showing it had done work to resolve differences in the amount recorded by another client for promotional activity and its estimated promotional allowance.

Another client had suffered two years of losses, its cash flow had turned negative, its margins were shrinking and it had drawn all its credit. Not a great picture. But Deloitte, according to the PCAOB, had not provided any evidence to show that it had tested management's plans as it evaluated the company's ability to continue as a going concern.

The PCAOB also revealed that Deloitte had provided no evidence of it testing any data underpinning the estimated "fair value" of intangible assets that a client company obtained through a big corporate acquisition in 2005.

The findings on Enron-style "fair value'' accounting follow the warning from PCAOB chairman Mark Olson early this month that the PCAOB is monitoring how companies and beancounters make the transition to the standard introduced last year.