Headlines, regulators take aim at audits
Like it or not, auditors, the spotlight is all yours these days.
Something tells me you won't like it.
In the past week alone, we've read the following:
- PCAOB officials say they are finding more problems -- not fewer -- at the firms it is inspecting. "Too often we find instances where standards aren’t being followed and situations where auditors are accepting evidence from management and not looking for, or ignoring, other evidence that may not corroborate or may contradict management’s position," said PCAOB chief auditor Martin Baumann. "We still find too many situations where professional skepticism is not where we think it ought to be.”
- In an effort to bring more transparency to the public company audit process, the PCAOB says registered accounting firms should be required to disclose the names of engagement partners in their audit reports. “Disclosure of participating firms would shine a light on these relationships and give investors a better idea of whose work supports the audit report they are relying on,” PCAOB member Daniel Goelzer told CFO.com.
- If your audit fees are going up, your company could be in trouble. "A high or rising audit fee can indicate one of two things," Reuters reports. "Either the auditor is charging a risk premium, aiming to cover future legal costs to them of something going awry, or they may just be doing more work on the audit, digging into areas where results are uncertain." Moreover, says Reuters, "audit fees substantially above those paid by competitors and companies of similar size are strongly associated with a slip in operating performance the following year."
Let's face it: No one likes to see their auditor walking through the door. Perhaps unfairly, that bad rep often comes with the job. Still, that's a lot of criticism to swallow in one week.
I'd love to hear our auditors' perspective on all of this. Is this the regulatory equivalent of unnecessary roughness? Or is it a fair attempt to shine the light on real issues that the audit community needs to address to better serve clients and the public at large?
Let us know what you think, then check out these related programs:
- Oct. 17: Auditor's Risk Assessment Process: Tackling the Risk Assessment SASs
- Oct. 19: Uncovering Misappropriation Schemes
- Oct. 24: Sales and Use Tax Audits and Fraudulently Filed State Returns
- Oct. 24 webcast: Strengthen the Inquiry Skills You Need to Gather Evidence
- Oct. 28: Fraud and Risk Management
- Nov. 1: Accounting Services, Compilations and Reviews: Effective Risk Management
- Nov. 7: Accounting and Auditing Current Developments
- Nov. 11 webcast: Top 5 Ways to Get the Most Value for Your Audit Fees
Also available is our "Auditing Bits in Bytes Video-On-Demand," a series of eight individual sessions that guides professionals through the complete audit process. For details, see the “On-Demand” programs at www.macpa.org/selfstudy.