Disney May Set Precedent for Auditor Independence

In a decision that may set a precedent for the public accounting profession, the Securities and Exchange Commission has ordered Walt Disney Company to go forward with a shareholder vote on whether the company's outside auditor may perform consulting work for Disney.

Last year, Disney's outside auditing firm, PricewaterhouseCoopers, performed consulting services in the areas of tax, accounting, information services, and business process matters. Although the SEC now requires that companies disclose on their financial statements the amount paid to auditors for non-audit services, the rule requiring that disclosure became effective after Disney's prior year financial statements were filed, so no such disclosure was made on Disney's statements.

In a written opinion, the SEC denied Disney's objection to the vote, "in view of the widespread public debate concerning the impact of non-audit services on auditor independence and the increasing recognition that this issue raises significant policy issues."

Speaking about auditor independence, Joyce Mader, an attorney who helped work on the Disney shareholder proposal said, "Given Enron, I think there are a lot of questions out there. It appears that is precisely what the SEC has said."

You may like these other stories...

I recently talked with Doug Sleeter about the current state of the small business consulting profession. We talked about how consultants have great opportunities for competitive differentiation by taking full responsibility...
By Shawn Moriarity, Senior Consultant, SageworksRemember dating in high school? You know that guy or girl who you liked but were pretty sure didn't feel the same way about you? It's likely that you doubtless spent...
By Shawn MoriarityYour car's fuel gauge reads empty and you need to find a gas station. Despite BP's new ad campaign or the magazine article you recently read about ExxonMobil's efforts to "go green,"...

Already a member? log in here.

Upcoming CPE Webinars

Oct 9In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards.
Oct 15This webinar presents the requirements of AU-C 600, Audits of Group Financial Statements (Including the Work of Component Auditors).
Oct 21Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience’s communication style.
Oct 23Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.