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February 2, 2023

Accounting News Roundup: PCAOB Approves the New Audit Report | 06.02.17

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The new audit report

The PCAOB unanimously approved its overhaul of the auditor’s report. Here’s the final rule, a fact sheet, and statements from the board members. PCAOB Chairman James Doty told the Wall Street Journal that the rule will make the report “more complete and relevant” and that “Investors want it.”

The main change will be the auditor’s responsibility to report “critical audit matters,” those “material and significant issues” that “were especially challenging or complex or forced them to make tough decisions” and reported to the audit committee. Firms will also have to report their tenure of service as auditor and state that the audit is designed to detect misstatements that are due to “error or fraud.” Those the disclosures will go into effect starting in 2018 while the critical audit matters will be required starting for some companies in 2019.

The auditor’s report hasn’t changed much in our lifetimes, and many people (i.e. investors) have long considered it to be worthless. The intent of the new rules will help auditors be more transparent about their work. “The audit is moving out of the black box,” Bob Conway, a former KPMG partner and former leader of the PCAOB’s Southern California offices told me. “Investors will clearly benefit from knowing more about the audit and and the people doing the audit.”

There are no guarantees, of course. Auditors can still look the other way, or the spirit of the rules could be lost if they conform into boilerplate disclosures. But incremental change could end up being meaningful. It certainly beats the status quo.

Food pushers

Yesterday we talked about burger addiction, and I think I know the source of all our strife. Burger purveyors are pushy!

Wendy’s Co. recently signed up with DoorDash Inc. to offer delivery in parts of Ohio and Texas, with plans to expand nationally within the year. “We fundamentally believe food at home is our number one competitor,” Wendy’s Chief Concept and Marketing Officer Kurt Kane said in a recent interview.

It’s bad enough that you can’t manage to eat decent food at work, burger dealers don’t even want you eating decent food in your own home. Forget 3 burgers a week; these monsters won’t stop until we’re eating 3 burgers a day! I’m sure President Trump will sign an executive order in the next month instructing the USDA to issue an all-hamburger food pyramid by the end of the summer.

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Previously, on Going Concern…

Megan Lewczyk wrote about 5G. Also, we shared a reminder to take our accounting salary survey.

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