Accounting Community Braces for PCAOB Concept Release of Mandatory Auditor Rotation
Posted: August 17, 2011 Filed under: Accounting, Accounting Laws, Accounting Professionals, Accounting Rules & Regulations, PCAOB | Tags: accounting laws, accounting rules and regulations, mandatory auditor rotation, PCAOB Leave a comment »Reports that the Public Company Oversight Accounting Board (PCAOB) is strongly considering instituting mandatory auditor rotation for public companies started making their way around the web in early June, after a speech given by James R. Doty, chairman of the PCAOB, in which he addressed problems and issues surrounding auditor independence and skepticism.
In an article posted earlier this month, Reuters noted that “about 175 companies in the S&P 500 index have had the same auditor for 25 years or more, according to data compiled by Audit Analytics at the end of last year. Seven companies have had the same auditor for over a century. Ultra-long auditor stints have for years been a concern to investor groups. Entrenched audit firms were linked to some of the biggest financial frauds of the past.”
The PCAOB’s goal is to ensure tougher, more independent audits to ensure protection of the public; however, the majority of professionals in the accounting world are vehemently opposed to this concept. Although the PCAOB claims this move would take pressure off auditors, who wouldn’t have to worry about losing clients they have long-term relationships with, accounting firms are worried about exactly that.
Rather than losing clients because of an audit, they would lose them to a new auditor as part of the mandatory rotation, including their most lucrative clients.
The PCAOB is also considering requiring specific partners to sign off on audits rather than have them signed by the firm, without any indication of which partner was involved, as well as requiring audit firms to disclose specifics of work done on audits by other firms.
As accounting professionals, how do you feel about mandatory auditor rotation? What are your biggest pros and cons?
We’d love to hear your thoughts on this one.
Mobility Privileges for Accountants Making Their Way to New York State
Posted: August 2, 2011 Filed under: Accounting, Accounting Laws, Accounting Professionals, Accounting Rules & Regulations, Mobility, Mobility Laws | Tags: accounting, accounting professionals, CPA mobility, mobility in New York, mobility laws, mobility rules and regulations, NASBA Leave a comment »On June 20, the New York State Assembly passed the Senate’s cross-border practice mobility bill, which will allow accountants who practice outside of New York State to perform accounting, management advisory, financial advisory or tax services there without requiring licensure or additional approvals.
According to the bill, which has not yet been signed into law by Gov. Andrew Cuomo, the purpose of the mobility legislation is to “promote uniformity in state CPA licensing laws in order to allow accountants to provide services across state lines via travel or electronic communication; to serve the needs of a wide array of clients; and to ensure a higher uniform bar for protecting public interest.”
The Business Council of New York, who supported this bill, wrote on its website: “The licensing standards for CPAs are virtually identical in each state and are based on the Uniform Accountancy Act. The standards that CPAs follow, such as Generally Accepted Accounting Principles (GAAS) – do not vary from state to state. The enactment of this legislation would not decrease New York’s ability to enforce its laws and regulations against individuals and firms who are practicing from outside New York.”
According to NASBA, mobility statuses have been approved in 47 of its 55 member states and jurisdictions, and are pending in most of the others.
In an article posted yesterday, the organization said that it has been working with its member boards to advise on pending mobility legislation and assist them with implementation strategies.
“We have also been ramping up our own programs and services around mobility, so that we can help CPAs and accounting firms both take advantage of new freedoms and still remain compliant in the locations where they operate,” said NASBA in its post.
States where mobility has not been implemented include Washington, D.C., California, Hawaii, Puerto Rico, Guam, the U.S. Virgin Islands and the Commonwealth of the Northern Marianas Islands.
