Apparently at the Coney Island Mermaid Parade.
Coney Island Mermaid Parade – 2010 [Flickr via DI]
Apparently at the Coney Island Mermaid Parade.
Coney Island Mermaid Parade – 2010 [Flickr via DI]
Alright, it's about time we stopped being productive and wasted the rest of this work […]
Last December, the PCAOB announced that they were going to kick around some ideas for a new and improved audit model. See, you may have heard about a few financial institutions that, it turned out, weren’t in such great shape. Funny thing – all these companies had clean audit opinions. This got people asking pretty awkward questions out loud like, “Are Auditors Irrelevant?” and making statements such as, “Get rid of [them]” AND “They add no value.”
The PCAOB listened to all this gnashing of teeth for about a year (or maybe their entire existence) and they came to the conclusion that some conversations needed to be had and even some changes might be appropriate. What exactly does that mean? Well, it sounds like we’ll hear some suggetions next Thursday when the next Standing Advisory Group meeting is held but in the meantime, the PCAOB’s Investor Advisory Group was plenty busy today, making several presentations that included some very interesting findings.
The first is “Improving the Auditor’s Report” that was prepared by Joseph Carcello of the University of Tennessee, Norman Harrison of Breeden Capital, Gus Sauter of Vanguard and Ann Yerger of the Council of Institutional Investors. Some items worth noting:
• 45% of respondents believe that the current audit report does not provide valuable information that is integral to understanding financial statements while 23% of respondents believe the current audit report provides valuable information.
• 18% believe the auditor report is of no use to them at all.
• Two selected comments from the report: “The statement feels very binary. Either a qualified opinion or not. Not a lot of incremental information once a company gets an unqualified opinion.” and “The audit report is valuable both because of what it says, i.e., an opinion, and by virtue of what it does not say, i.e., an exception.”
• Examples of disclosures that users were asked about: Disclosure of risks (“77% believe auditor should disclose areas with greatest financial statement and audit risk and the audit work performed in those areas”); disclosure of audit hours (“51% believe the auditor should not be required to disclose hours spent on individual financial statement accounts”); materiality thresholds (“56% believe the auditor should disclose quantitative and qualitative materiality thresholds and considerations”); audit partner signature (“44% support requiring the audit partner to personally sign the audit opinion”).
There’s more where this came from so check out the full presentation for some interesting reading. We’ll have more tomorrow.
A couple of weeks ago, Silvercorp Metals responded to an anonymous letter that alleged that the company was engaged in some dodgy accounting practices. Understandably, the company was irked by this little stunt, responding that it was complete BS and due to some short-sellers trying to take advantage of the rash of sketchy accounting scandals involving companies that have a connection to China.
Now, a second anonymous letter has appeared and the company is again going on a PR offensive to calm everyone down because, really you guys, nothing is fucked here and that these reptiles need to come out and start cooperating with investigators if they’re really concerned about things outside their wallets. And so everyone gets the message loud and clear, this was not delivered by some everyday flak but by the Chairman of the company, Dr. Rui Feng:
“I ask shareholders to exercise common sense in assessing whether these allegations of “fraud” against the Company have any merit whatsoever in the face of very significant revenues, tax payments and dividends, and particularly when the accusations are made anonymously by parties whose only interest is in depressing the Company’s share price. I invite the authors of the anonymous allegations to come out of the shadows and participate with the regulators in their investigations, if their concerns truly extend beyond the profitability of their short positions.”
Furthermore, the company’s independent committee has engaged a KPMG Forensic team to help get to the bottom of this. And they certainly know the traits of fraudsters when they see them. Everyone just chill out.
[via Silvercorp Metals]