SEC Chief Gives Backing to Stronger Watchdog
Lynn Turner told  the SEC's annual conference that he supported the recommendations of the O'Malley Panel on Audit Effectiveness, which suggested a number of changes to the watchdog in the light of the public's opinion of the accounting profession.
Among these were the need for greater oversight of the standard-setting bodies, and independent funding for the POB. With firms paying for their own regulator, Turner pointed out, "The POB cannot and will not be perceived as being a truly independent oversight board."
Turner said that he wanted a serious commitment to making changes in how the profession performs audits. "There is a small but growing crack in the public's confidence in us," he said. "And much of that relates to the performance of some in our profession on audits."
Part of the O'Malley report stated: "The Panel's perspective is that, even in the face of strengthened auditing standards issued over the past 15 or so years, audit firms may have reduced the scope of audits and level of testing, at least in part as a result of redesigning their audit methodologies."
Turner was sure that the Auditing Standards Board could strengthen the standards guiding auditors in their work, and "achieve each and every goal O'Malley has set forth" - a hint that the SEC wants to see all the O'Malley recommendations implemented.
The proposed Cognitor qualification also came in for a rough ride. Turner noted how, when he asked an audience made up of a cross-section of the profession, only one person came out in favor. Those opposed cited the possible detrimental effect the Cognitor qualification could have on existing designations.
Of 3,000 letters sent to the SEC on the proposal - which involves the creation of a global business qualification with the same standing as a CPA certification - the "same sense of pride and honor in the profession" was displayed, Turner revealed.