What's the Password? Five Possible Answers for Accounting Regulators
by Edith Orenstein on
3. SEC: Enforcement
If I had a crystal ball, I’d say it’s likely we’ll see some major action on the enforcement front to demonstrate the strategy behind the high-level initiatives led by Chairman Mary Jo White and Enforcement Director Andrew Ceresney, as noted last year in our posts: No-Admit, No-Deny: SEC Policy Evolution, Not Revolution (citing White), and SEC Forms a FRAT! (citing Ceresney on SEC’s new Financial Reporting and Audit Task Force). [NOTE: Ceresney is now the sole director in the Division of Enforcement, as his former co-director, George Canellos, recently announced he will leave the SEC later this month.]
Chairman White outlined further what would happen in a world in which fewer cases would be resolved under no admit, no deny settlements, in her speech on November 14, 2013, entitled, "The Importance of Trials to the Law and Public Accountability."
Drilling down to the Office of the Chief Accountant (OCA), Brian Croteau, deputy chief accountant with responsibility for professional practice (auditing standards, professional practice, internal control over financial reporting, and related matters), spoke of the OCA's liaison role with the Division of Enforcement in his remarks at the December 2013 AICPA National Conference on Current SEC and PCAOB Developments. I strongly recommend that readers review the enforcement subsection (and other sections of interest) in Croteau’s remarks at the AICPA conference.
4. PCAOB: New
In 2013, although not proposing mandatory audit firm rotation (which Congress prohibited the PCAOB from doing - although the Senate did not take any vote on the matter), the PCAOB proposed a rule that would require disclosure of the term of the audit firm, as part of its proposal to change the auditor’s reporting model.
Although the usefulness and proper “geography” of any such disclosure of the term of the audit firm were debated (e.g., if useful, should such disclosure really be in the auditor’s report, the audit committee’s report, or the proxy statement?), these issues paled in comparison, in my view, with larger issues contained in this particular proposal, including a requirement that auditors disclose and discuss critical audit matters (CAMs), and that auditors up the ante, terminology-wise, at least (but inquiring minds want to know: will this change in language drive behaviors that will up the time spent, audit fees relative to, auditors' level of responsibility for, and investors’ reliance upon the underlying information?) due to the fact that auditors would be required to “read and evaluate”, not just “read and consider”, other information contained in a report containing the audited financial statements and auditor’s report thereon.
5. COSO: Now
COSO released its updated Internal Control-Integrated Framework, a twenty-year update to its landmark 1992 internal control framework, in May 2013.
As announced by COSO at that time, the COSO 2013 framework will be deemed to supercede the 1992 framework as of December 15, 2013. Thus, the time to implement what many people informally refer to as “COSO: 2013” is NOW.
SEC Chief Accountant Paul Beswick subsequently commented on COSO adoption, as noted in Control Yourself !! SEC Staff on COSO; Learn More. Beswick reiterated his remarks at FEI’s Current Financial Reporting Issues Conference (CFRI) in November 2013.
Further details on these “Passwords” and related information can be found in Five for 2014.
You may like these other stories...
Federal judge tosses IRS lawsuitsBernie Becker of The Hill reported that a federal judge sided with the IRS on Thursday, tossing out two lawsuits filed against the tax agency over its improper scrutiny of Tea Party groups...
SEC, Big Four Chinese affiliates make progress in talks over audit documentsMichael Rapoport of the Wall Street Journal reported that the US Securities and Exchange Commission (SEC) and the Chinese affiliates of the Big Four...
Koskinen warns filing season could be most complicated yetImplementation of the Foreign Account Tax Compliance Act and the Affordable Care Act, combined with a tight budget and the possibility of Congress passing a late...