The watchdog for the US accounting industry on Thursday released reports that said PwC and Ernst & Young, two of the four largest US accounting firms, had produced some audits with significant deficiencies.

The Public Company Accounting Oversight Board, created after the bankruptcy of Enron forced Arthur Andersen, its auditor, out of business, is releasing reports on its first full-scale annual inspections of each registered public accounting firm that regularly provides audit reports for more than 100 issuers. The watchdog also released a similar report on BDO Seidman, a US accounting firm.