Microsoft pays more than Apple for its audit, and why investors should care [Fortune]
Jack Ciesielski writes that audit opinions "[instill] confidence in the financial statements and the capital markets, something nobody misses until it's too late" which is sorta like having the meanest, most protective watchdog sleep through a robbery. In other words, the confidence is pretty useless. Wait! There's more:
The auditor’s opinion is the financial reporting equivalent of a horseshoe crab – a living fossil, hardly changed since prehistoric days. Basically a rubber stamp, the audit opinion says nothing about the work and thinking behind it. The proxy statement gives investors the amount of audit and other fees paid, along with sanitary assurances of propriety by the audit committee. Mildly reassuring, the disclosures are often boilerplate and convey little beyond the audit committee declaring, “We did our job.” Investors crave information, but this isn’t information they crave.
He goes on to draw comparisons between similar companies' audit fees: Apple and Microsoft; AT&T and Verizon; Citi and Wells Fargo. In each case, the disparity in fees doesn't make a lot of sense and Jack thinks that's a shame, "It’s a sad statement that investors aren’t more curious about the nature of an audit – something provided strictly for their benefit."
It is sad! But don't forget that we're talking about the "financial reporting equivalent of a horseshoe crab" investors are more to look upon that with pity than they are with awe. Ciesielski is hopeful that the PCAOB's proposed audit quality indicators "might make investors care about what’s going into an audit." And the possibility that investors might care is an improvement on not caring "until it's too late."
Median Director Pay Rises to $250,000 at Largest U.S. Firms [CFOJ]
Not a bad gig if you can get it.
Professional services: Accounting for change [FT]
People are worried about auditor independence:
In June EY was fined £250,000 — a near-record penalty by the UK insolvency regulator — over the failure to declare a conflict of interest.
The case underscores the evolution over the past decade of the “Big Four” — PwC, Deloitte, EY and KPMG — from auditors into professional services firms whose fastest-growing divisions are non-audit services such as consulting.
“There’s nothing they can’t do for a fee and nothing they won’t do,” says a former UK senior partner at one of the Big Four.
We've argued before, a time or two, that the notion of auditor independence is meaningless. After a while, you sorta resign yourself to the idea that accounting firms treat conflicts of interest as a cost of doing business in their quest to be Walmarts of professional services.
Accounting firm buys into Pennsylvania, again [Crain's]
More specifically, Baker Tilly acquired SF&Company.
Email Communication Still Ubiquitous: Survey [CFO]
Breaking: "Nine of 10 respondents said they check personal email at work and work email from home."
Beware Manspreading, Enjoy Wine O'clock: New Oxford Words [NYT]
Grexit, butt dial, cat cafe are among the others added.