Please ensure Javascript is enabled for purposes of website accessibility
December 1, 2022

Accounting News Roundup: PCAOB Teasers and An Accountant-Looking Hitman | 04.20.16

PCAOB Inspections

Auditor of auditors, the PCAOB, released the closest thing it has to a teaser-trailer yesterday: Staff Inspection Briefs that preview its 2015 inspection findings of both auditors of issuers and broker-dealers.

The good news is the 10 firms the Board inspects every year didn't suck it up:

Preliminary 2015 inspection results of the annually inspected firms indicate the overall number of audit deficiencies identified has decreased compared to the results from the 2014 inspection cycle.

Inspections staff has observed indications of improved audit quality over time in some of these firms inspected, and some of the contributing factors to these improvements may include changes in areas such as new practice aids and checklists, coaching and support to teams, and monitoring the quality of audit work performed.

The bad news is, everyone else did:

For firms that are required to be inspected at least once every three years (“triennially inspected firms”), Inspections staff observed an overall high number of audit deficiencies in preliminary 2015 inspection results.

As for broker-dealer auditors, they're still struggling with some basics:

In 2015, independence impairments were identified with less frequency than in the past, though Inspections staff continued to observe instances in which independence appeared to be impaired because the auditors were involved in the preparation of the financial statements or performed bookkeeping or other prohibited services related to the accounting records of their broker and dealer clients.

We've noted some of these independence problems, but it's always going to be moot in the fuller context of the issuer-pay model. In any case, I'm sure the 2015 inspection results will be a hoot.

Elsewhere in auditing: PwC Canada cleaned up last year.

SEC Enforcement

The SEC announced a couple of accounting enforcement cases yesterday against Logitech International, Ener1 and executives at each company. Both cases are pretty tedious: Logitech's related to warranty accruals and amortization. Ener1's case features an investment and receivables that management failed to write down. A PwC partner, Robert Hesselgesser, got wrapped up in the Ener1 mess, as he, basically, got lazy:

[Hesselgesser] failed to perform sufficient procedures to support his audit conclusions that Ener1 management had appropriately accounted for its assets and revenues.

Fines. Suspensions. Clawbacks. You know the drill.

Elsewhere: According to Cornerstone Research, accounting-related class action lawsuits increased for a third straight year in 2015. Settlements were $2.6 billion.

Non-GAAP Worries

If you or someone you know is worried about non-GAAP reporting, you'll want to keep your eyes peeled during conference season, when you're surfing the web, basically everywhere:

There is no question that some companies have become overly aggressive with the nature and scope of their non-GAAP adjustments. Inconsistencies can arise between marketing-oriented earnings and other financial releases and actual SEC periodic reports, particularly regarding the prominence and nature of non-GAAP measure presentations. Similar problems can arise with regard to investor trade conference presentations, whose slide decks are frequently posted on company web sites and non-GAAP financial measures posted on social media. And occasionally the purposes behind a company’s use of non-GAAP disclosures are less than honorable.

You can't stop non-GAAP metrics; you can't even hope to contain them.

Elsewhere: This one is from last week, but you'll be shocked — SHOCKED — to learn that tech companies love non-GAAP metrics.

Accountants Behaving Badly

This headline reads: "The Hells Angels hitman who looked like an accountant" so while an accountant did nothing wrong here, it insinuates that you should be fearful of accountant-looking people because they could mixed up with a bike gang or some other bad behavior. For more classic bad accountant behavior, there's this Long Beach accountant who's been accused of embezzling $200k from foster homes.

Previously, on Going Concern…

Should a person should acknowledge every email? And in Open Items, more discussion on the AICPA member ballot.

In other news:

Get the Accounting News Roundup in your inbox every weekday by signing up here.

Latest Accounting Jobs--Apply Now:

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

Comments are closed.

Related articles

a dog wearing VR

Monday Morning Accounting News Brief: Deloitte on Microtransactions; More EY Split Roadblocks; Have You Become Irritable? | 11.28.22

Happy Monday! Here’s some stuff that’s going on. Several US audit firms told the Financial Times that they had elevated some or all of their crypto-related clients to the status of “high risk”, triggering a more thorough audit that will take longer and lead to higher bills; some clients could ultimately be dropped altogether. KPMG […]

woman working on a laptop with a dog beside her

Monday Morning Accounting News Brief: The Leadership Void; KPMG Gets Fined (Again); PwC Ups Leave | 10.3.22

Deloitte launches Global Sustainability & Climate learning program that aims to enhance skills and capabilities of Deloitte people to help address a global societal challenge. Dubai’s financial regulator has provisionally fined KPMG and one of its former partners $2 million over the firm’s auditing of Abraaj, the emerging markets private equity group that collapsed in […]