Auditors continue to stumble over fair value measurements, but they are now having trouble with different issues, a new report reveals.

Over 40% of all audits inspected by the Public Accounting Oversight Board in 2012 had deficiencies, and the number of fair value measurement (FVM) deficiencies made up about 25% of all audit deficiencies, according to the third annual “Survey of Fair Value Audit Deficiencies” from Acuitas, an Atlanta-based valuation and litigation consultancy firm.

New trends: The report notes that there’s a shift in the sources of FVM deficiencies. In 2012, insufficient testing of financial instruments caused 87% of FVM deficiencies, but that percentage dropped to 55% in 2012. Business combinations are now the source of 45% of FVM deficiencies in 2012, up from 9% in prior years. Also, failure to assess risk and failure to identify or test internal controls caused a significant increase of FVM and impairment deficiencies. Risk assessment and control deficiencies caused 41.2% of the FVM deficiencies and 50% of impairment deficiencies cited by the PCAOB in 2012.

“The recent decrease in FVM audit deficiencies relating to the pricing of financial instruments is likely the result of audit firms’ responses to PCAOB inspection reporters, auditors having more experience dealing with FVM audit issues, and an improvement in economic conditions,” says Mark Zyla, managing director of Acuitas. “As economic recovery has increased, the pace of merger and acquisition activity and the number of deficiencies noted by the PCAOB relating to business combinations have increased.”