PwC Chairman Calls For Expanded Auditor Responsibility

Speaking at the Economic Club of Detroit on March 17, PricewaterhouseCoopers Chairman Dennis Nally called for the auditing profession to expand its role to include greater responsibility for more of the contents of a company’s annual report.

Audit reports "should cover the Management Discussion & Analysis, the proxy and other nonfinancial operating data," according to Mr. Nally.

Mr. Nally indicates that the current standard – providing "reasonable assurance" that the financial statements are free of "material misstatement" - needs to be expanded in order to restore investor confidence in the content of the company’s annual reports.

"As a profession, we should work with company management and the audit committee to ... consider incorporating into the audit report disclosures that are critical to helping investors understand the company's business."

Mr. Nally continued, "Our audit report would extend to cover information in the MD&A relating to the impact of, say, exited businesses on the company's sales, on its margins, on its overall reported profits and, ultimately, on its cash flow."


Already a member? log in here.

Editor's Choice

Upcoming CPE Webinars

Nov 24This webcast presents basic principles of revenue recognition, including new ASU 2014-09 for the contract method. Also, CPAs in industries who want a refresher on revenue accounting standards will benefit.
Dec 3The materials discuss the concepts and principles in the AICPA’s new special purpose framework.
Dec 9A key component to improving your firm’s workflow efficiency while enhancing your profitability at the same time is how you leverage emerging technologies.
Dec 9Kristen Rampe will cover how to diffuse the tension in challenging situations in this one-hour webinar.