According to the PCAOB staff inspection brief, the inspections staff is taking a close look at three general areas across firms: auditing internal control over financial reporting; assessing and responding to risks of material misstatement; and auditing accounting estimates, including fair value measurements.
These are among the most common areas where inspectors found significant deficiencies in the past several years. In addition, PCAOB inspectors consider the current economic environment and related developments in their reviews. For example, economic uncertainty stemming from the financial crisis and the sluggish global economy has in the past factored into the audits and the areas selected for inspection.
Interestingly, only 10 firms are inspected annually and those firms audit more than 100 issuers. The remaining 120 firms audit fewer than 100 issuers. So, I guess, this is a pretty good cheat sheet for any teams who expect an inspection to be coming their way.
Accounting firm plans to expand 33 percent in Pittsburgh [PBT]
That firm is Grant Thornton. They returned to the Steel City just two years ago and it plans to hire 12 more people by next July. Those hires will be mostly accountants since "just six of its current 36 employees are in that field."
Plea deal resolves Lexington accountant's $8.7M six-year-old Ohio embezzlement case [AP, Earlier]
The trial of James Hammes, who originally pleaded not guilty to embezzling nearly $9 million from his former employer, has been cancelled and he has reached an plea agreement with prosecutors. Again, I recommend this post if you want to read all the back story. You won't regret it.
PWC resigns as Xero's auditor so it can promote its products [Stuff.co.nz]
This is refreshingly honest for an auditor resignation:
PWC has resigned as auditor of software company Xero, which says the consultancy is actually paying it a compliment. Rather than there being anything sinister in PWC's resignation, Xero said PWC would stop signing off Xero's accounts so it could recommend Xero's cloud accounting service to its own customers. PWC's decision to stop acting as Xero's auditor with immediate effect was designed to prevent any appearance of a conflict of interest as it took up the new role promoting Xero's products.
I can just hear the conversation, "Hey! You know, we think Xero is swell so we're thinking we'd stop being your auditor because independence doesn't forbids us from saying, 'We think Xero is swell!' How does that sound?" And Rod Drury probably said, "Hey! That sounds great!" Because Kiwis are pleasant and excited.
In other news:
- Volkswagen keeps promoting people from within. [CFOJ]
- The Mike Lynch-HP saga continues. [Bits/NYT]
- Extreme commuting. [Quartz]
- If you're a T-Mobile customer, you might want to change some passwords. [CNN]
- “A lot of guys go through a midlife crisis and they buy the sports car. I just got a beard.” [NYT]