I view successful
litigation against negligent auditors and strong
enforcement of sanctions for auditor malpractice as positive developments.
This is a view many of my readers would disagree with. However, I've learned
over the last four years not to get too excited by any one positive development
on the auditor regulation or litigation front.
If you think auditors should be immune from liability or
accountability for their malpractice and aiding
and abetting fraud, you've bought the "too
few to fail" argument. You've abandoned the expectation of a
public duty for audit professionals. Maybe you don't think audit is a
profession anymore. The global audit firms have a successful business model -
albeit an oligopolistic one. You've accepted the fact that audit firms will
look after their partners and their profits before the public and believe they
have every right to do so.
You would be wrong on all counts.
This week I will be in Washington DC to attend the March
24 meeting of the new Standing
Advisory Committee (SAG) of the new PCAOB. Three new PCAOB Board members
were appointed late last year after the Supreme Court removed the cloud of
uncertainty over its continued existence with their decision in Beckstead v. PCAOB.
The SAG 2011 group
includes some new members and some in their second term. Many of them I have
met and spoken to in the past. Some of them I even knew professionally prior to
their appointment. The PCAOB also initiated an Investor Advisory Group
(IAG) in 2010. There are some SAG members in this group and some additional
members as it is intended to represent the
investor community - the intended users of auditor reports and the
auditors' true client.
Last Wednesday, March 16, 2011, the PCAOB IAG held their
first meeting of 2011. Several working papers were presented and some strong statements
were made. New PCAOB Chairman Jim Doty also reiterated statements that portend
changes for auditors and increased
scrutiny of their actions, especially surrounding the financial crisis.
Read this article in its entirety at the re: The Auditors, a blog
by Francine McKenna.
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