The Public Company Accounting Oversight Board (PCAOB), based on inspection results of audit firms and other information, has become increasingly skeptical about, well, skepticism. That is, the PCAOB has questioned- and asked what the proper solution would be - to the extent auditors are not exercising sufficient skepticism of company management and the numbers they are being asked to sign off on.
PCAOB Concept Release
This matter was raised as part of the PCAOB's Aug. 2011 Concept Release entitled: Concept Release on Auditor Independence and Audit Firm Rotation, which stated in its opening paragraph: "The [PCAOB] is issuing a concept release to solicit public comment on ways that auditor independence, objectivity and professional skepticism could be enhanced."
The subject which received overwhelming criticism in comment letters filed on the Concept Release was the concept of proposing a manadatory audit firm rotation requirement. The PCAOB has sought additional feedback on the Concept Release through a series of public roundtables, which continue with the next one slated to take place in Houston next week.
Private Sector Steps Up
Are more regulations always the answer to real or perceived problems in the way businesses operate? The trick word here is "always;" new regulations may be necessary, but not always.
For example, enhanced education about existing rules, and enhanced oversight about compliance with existing rules may be less costly and more effective than layering on more rules.
FEI President and CEO Marie Hollein, in Congressional testimony earlier this year on the 10th Anniversary of the Sarbanes-Oxley Act, noted that the private sector is 'stepping up,' including through efforts that FEI is involved in such as the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and efforts of an Anti-Fraud Collaboration formed in 2010 by the Center for Audit Quality (CAQ), of which the members are the CAQ, FEI, the Institute of Internal Auditors (IIA), and the National Association of Corporate Directors (NACD).
Webinars Examine Skepticism Throughout the Financial Reporting Supply Chain
The most recent project released by the Anti-Fraud Collaboration is a webinar series on Skepticism. The high quality series was produced by the NACD, and includes interviews with key members of the financial reporting supply chain (financial executives/management, internal auditors, external auditors, and corporate directors) on the subject of skepticism and how they exercise it.
The first installment in this webinar series on Skepticism was launched on Oct. 1, 2012. Read more details about the NACD's webinar series and the above topics in Skepticism: No Doubt About It!