SEC Using MicroStrategy as Example of Auditor Independence Violations

This is not the first time that the alleged marriage between Vienna, Virginia based software developer MicroStrategy and the auditors and consultants at PricewaterhouseCoopers has been in the news. The SEC is convinced that the aggressive use of prematurely booking revenue which may have overstated profits at MicroStrategy was first recommended by PwC consultants then passed on by PwC auditors.

Whether or not there was any impropriety with MicroStrategy's financial reporting and their subsequent audits remains to be seen. The bigger issue, however, is how the SEC is going to rule when it comes to auditor independence.

Public hearings on the proposed guidelines to limit the ability of public accounting firms to perform consulting services are set for next week and representatives from all the major accounting firms are lining up to have their say. Stay tuned as we continue to report this story which will have an impact on accountants everywhere.

You may like these other stories...

The Public Company Accounting Oversight Board (PCAOB) on Tuesday adopted a new auditing standard and amendments in three areas of the audit that could pose an increased risk of material misstatement in company financial...
Read more from Larry Perry here and in the Today’s World of Audits archive.In my last article, I presented an overview of one of the first steps in the preplanning phase of an audit engagement: reviewing prior year...
Read more from Larry Perry here and in the Today’s World of Audits archive.AU-C Section 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks (SPFs),...

Already a member? log in here.

Upcoming CPE Webinars

Oct 30Many Excel users have a love-hate relationship with workbook links.
Nov 5Join CPA thought leader and peer reviewer Rob Cameron and learn ways to improve the outcome of your peer reviews while maximizing the value of your engagement workflow.
Nov 12This 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.
Nov 18In this session Excel expert David Ringstrom, CPA tackles what to do when bad things happen to good spreadsheets.