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PCAOB Chairman Warns More Restatements Could be Coming

Posted by AccountingWEB in on 10/14/2004 - 21:28

With field work due to end in December on the latest round of auditor inspections, Public Company Accounting Oversight Board Chairman William McDonough cautioned this week that more financial restatements may be coming.

The PCAOB was created by the Sarbanes-Oxley Act to oversee the accounting industry and set auditing standards.

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McDonough spoke at a corporate governance forum yesterday, which was part of the second annual Directors' Institute on Corporate Governance sponsored by the Practising Law Institute, Dow Jones Newswires reported.

He reminded those gathered at the forum that the limited 2003 inspections led to some restatements, and 2004 could be the same.

"That may continue to happen as we proceed with our 2004 inspections," said McDonough.

He later told Dow Jones that while there is no hard evidence yet, on a "theoretical basis," potential restatements could be on the horizon as inspectors find problems in audits that accountants should report to their clients, Dow Jones reported.

Last year, just the Big Four firms were subjected to limited inspections. This year, PCAOB inspectors are inspecting up to 650 auditor-client engagements with the nation's top eight firms, Dow Jones reported.

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Amidst a certain amount of controversy, the AICPA and the Chartered Institute of Management Accountants have launched a new designation for global management accountants, the CGMA (Chartered Global Management Accountant). The designation is available to members of both organizations.
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Gail Perry, CPA
Editor-in-Chief, AccountingWEB
editor@accountingweb.com