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December 8, 2022

Accounting News Roundup: Objective Audit Quality; Lottery Winners; More Accounting Firm M&A | 01.14.16

Audit committees prefer customized, tailored audit quality indicators [JofA]
I don't know about you all, but the idea of "objective measures of audit quality" strikes me as slightly oxymoronic. Is quality objective? That is, does everyone agree on what a quality audit is or is it subject to the whims of personal preference? Judging by the headline of the JofA story, I would say, "No one agrees on what a quality audit is and it is always subject to the whims of personal preference." Here's more evidence of the "quality is fluid" argument:

A CAQ report issued Tuesday summarized feedback from audit committee members who participated in pilot testing of the proposed audit quality indicators. After the pilot testing, most of the participating audit committees and engagement teams generally expressed support for a discussion of audit quality indicators between audit committees and engagement teams, though feedback on individual indicators varied.

Even things like an audit partner's years of experience of industry expertise can't be objective. Obviously a partner who has spent 30 years auditing banking clients has objectively more experience than a partner with 15 years auditing banking clients, but does that mean Partner #1's audits get an A-grade and Partner #2's audits get a B-grade? No. No it does not. It seems to me that to define and objectively measure audit quality is a fool's errand, one that's given plenty of lip service because investors want quality audits of the companies they invest in, but audit firms can't deliver because the quality is subjective. While you chew on that, then there's this finding from the CAQ roundtable:

Belief that mandated public disclosure of engagement-level audit quality indicators could lead to unintended consequences and that any disclosures of information on engagement-level audit quality indicators should be voluntary.

My best interpretation of this statement is: "Disclosing audit quality measures will be second guessed by lawyers who want to sue us when things go horribly wrong, so we'd prefer not to share those with anyone, including investors." If I have that wrong, someone please tell me. Because if I'm in the ballpark, then this whole "defining audit quality" exercise seems kinda pointless.

Powerball Jackpot: We Have 3 Winners [Atlantic]
Winning tickets were sold in California, Florida and Tennessee and I suspect none of those ticketholders are reading 500-word articles on the internet about the taxes they have to pay. Rather, I hope the people holding those tickets are talking to tax experts who don't need to read 500-word articles on the internet about taxes. Maybe one of those tax experts is you! In any case, there were other winners, including a $2 million ticket in Iowa and three $1 million tickets in Maryland and two $1 million tickets in Virginia. There were also $2 million "Power Play" winners in Arizona, Florida, North Carolina, New Jersey, Tennessee, and Texas worth $2 million. They'll need tax help too, so you better get hustling before all these people get struck by lightning or killed in a shark attack.

More M&A
It's January which means deals are still being announced, from NY/NJ to Portland. And CBIZ sold its Wichita office to Swindoll, Janzen, Hawk & Loyd because its "staff […] was interested in becoming locally owned again," which suggests something, although I'm not sure what.

In other news:

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