Category: Audit

(UPDATE) Is the PCAOB Going the Way of the Dodo?

Dodo_bird.jpgWho knows? Our separation-of-powers principles knowledge is pretty much zilch. However, the PCAOB is currently “doubly insulated from both political pressure and presidential oversight” which some – including the Plaintiff in the case, First Free Enterprise Fund – think is unconstitutional.
The case, First Free Enterprise Fund v. PCAOB, will be argued during the new session of the U.S. Supreme Court on December 7th. Here’s the take of our sister site, ATL, last year when the possibility of the SCOTUS hearing the case first came up.
More, after the jump


We won’t rehash the whole immaculate conception of the PCAOB, as you’re all familiar with that story. First Free Enterprise Fund v. PCAOB, however, could make things interesting: “This case has the potential to undo the SOX accounting and auditing reforms. As such, the result may impact not just the auditing profession, but also every public company as well as the users of financial statements of those companies.”
‘Undo SOX accounting and auditing reforms’? That sounds kinda serious. We won’t go so far as to suggest that you start forgetting everything that you’ve been trying to get your heads around for the past seven years, but there’s at least a possibility that the PCAOB could become extinct. That could be exciting, or it could make you completely f*cking miserable again.
New Court Term May Give Hints to Views on Regulating Business [NYT]
The Supreme Court Term – Significant Cases for Business [SEC Actions via JDA]
Supreme Court Obsessed With Business This Session [Law Review]

KPMG Arrives at the Paperless Audit Party

office-space-402a-061907.jpgWe’ve received several reports about Klynveldians attending “eAudit” training this summer which marks the firm’s attempt to get break into the “paperless” audit world. Reports have been mixed with some saying that it’s best technology KPMG has invested in but others claiming that it will only run on Vista which may be problematic when Windows 7 rolls out.
Forgetting the technology mumbo-jumbo, it’s been long rumored that KPMG was the last major firm to make the move to a paperless audit. This could have been due to a number of things:
More, after the jump


• Partners that have been around since WWII that can’t even use email put the kibosh on the whole idea
• M-O-N-E-Y
• Accountants, in general, resist the idea of trying a new restaurant so don’t even think about messing with their audit methods
What’s more surprising is that some Radio Station clients have said that they prefer the old school audit. Not exactly sure what is so appealing about young auditors schleping around boxes of binders that weigh a few metric asstons but whatevs.
Our point, dude, is that KPMG has finally caved on this whole “paperless” idea. Since audits aren’t truly paperless we’re not sure what all the fuss is about but KPMGers got an extra week in Florida in the dead of summer out of it. Discuss the firm breaking into the new century in the comments or let us know how terrible your lives will be because of it.

Add Another Hoop to the Audit Process

signature.jpgIn a move that probably just adds one more annoying hoop to jump through for auditors, audit engagements will now go through quality review with adoption of AS No. 7, Engagement Quality Review (EQR).
According to the press release, “The EQR standard provides a framework for the engagement quality reviewer to objectively evaluate the significant judgments made and related conclusions reached by the engagement team in forming an overall conclusion about the engagement.”
We’re hoping the engagement quality reviewers will be given free range to document their “overall conclusions” as they wish. Some that we would suggest: “You call yourselves auditors?“, “I’m recommending that the PCAOB inspect this engagement” or “What in God’s holy name are you blathering about?“. It would be a shame for the firms to institute a check-the-box method that would compromise artistic integrity.
In other PCAOB news, the Board is asking for comments on its Concept Release “to consider the effects of a potential requirement for the engagement partner to sign the audit report.” We speculated last week that signatures in blood or dog excrement might be appropriate in many cases but if you’ve got other ideas, you’ve got 45 days to give them better suggestions.
Press Release [PCAOBUS.org]