It may be called The Westerly Sun but this paper is throwing nothing but shade at Marcum.
Concerns over the reputation and legal troubles surrounding the audit firm Marcum LLP have led members of the Chariho School Committee to terminate its contract, moving in a different direction for the first time in 18 years.
Members of the School Committee voted 11-0 on Tuesday, with Donna Chambers abstaining, to terminate the contract with James Wilkinson of Marcum LLP. The committee then voted unanimously to award the bid to the next qualified firm, Hague, Sahady & Co., PC.
“It comes down to a reputation issue; the issues that were pointed out in such a high percent of audits coming from the firm,” said member Tyler Champlin, who had requested the agenda item alongside Chairwoman Catherine Giusti and motioned for the dismissal of Marcum LLP.
“You aren’t going to go to a doctor with a 25-50% mortality rate, at least most people wouldn’t,” he said. “Knowing that this company has had an issue with a member town (Charlestown) as well, I’m not comfortable with it at this point.”
We wrote about the issue with a member town previously. Marcum sent tiny little Charlestown, Rhode Island an unitemized $55,992 bill for out of scope services on the town’s 2022 audit, the town council was furious, Marcum kept dodging them when they asked for an explanation of fees, and eventually the town threw them $18,000 to settle the matter. Obviously they’re no longer a client.
This of course pales in comparison to the bigger issue of the PCAOB and SEC hitting Marcum with huge fines in June for taking on too many clients and failing to perform the work with the required level of professional competence. No really, the PCAOB’s press release about it uses the word “competence” four times.
- Marcum’s quality control system did not provide reasonable assurance that it could execute these audits with competence.
- “Firms have a responsibility to undertake only those engagements that they can reasonably expect to be completed with professional competence,” said Robert E. Rice, Director of the PCAOB’s Division of Enforcement and Investigations.
- The PCAOB found that Marcum LLP’s system of quality control failed to provide reasonable assurance that the firm would:
- Undertake only those issuer engagements that the firm could reasonably expect to be completed with professional competence and appropriately consider the risks associated with providing professional services in the particular circumstances;
- Ensure that partner workloads were manageable to allow sufficient time for engagement partners and engagement quality review partners to discharge their responsibilities with professional competence and due care;
Sucks for them but it sure is funny for us!
Their fearless leader is such a tool that, sometimes, he drives an old red Mercedes to the Melville, Long Island office and the vanity license plate says “extra car”. Napoleonic complex like you read about.
Hahahaha
hiring out to India, wfm which means less opportunity to learn from peers day to day, tired associates working 12+ days. Marcum is the tip of the iceberg.
Audit quality indicators have been ignored for far too long by the PCAOB. Given the high level of audit deficiencies identified in audit inspections, it’s high time the PCAOB move forward on this issue. Now, the Board has issued a complimentary document, “Firm and Engagement Performance Metrics.” It will be interesting to see how the discussion develops on the briefing paper. In many respects, it’s the firm’s own internal audit quality procedures that signals whether an audit will provide reasonable assurance that the financial statements are free from material misstatements and fraud.
A company that fires its auditor over concerns about audit quality is telling on itself. If the books are clean and everything is in order, audit quality shouldn’t be an issue.
Solid companies only fire their auditor for one reason: excessive fees
Solid companies fire their auditors over more reasons than just excessive fees. What about an engagement team with constant turnover that doesn’t get the job done? What about a partner that is out to lunch and doesn’t listen to the owner and try to solve their pain points?
Isn’t the Board here just doing their fiduciary duty by questioning the capabilities of Marcum? Even the press release from the SEC was scathing. We’re not talking about a “solid company” but a school district here. They are accountable to the taxpayers and if there is a botched audit due to Marcum’s negligence, the Board will be on the hook as its their responsibility to vet the accounting firm. Kinda blows my mind how you’re overseeing that here.
I think the part you are missing is that no one gives a shit about the audit. It’s a check the box exercise. If the company really does have it’s shit together, there will never be a problem because they won’t issue materially misstated financial statements regardless of how bad the auditors suck.
Ehhh I think it depends. Private company? Absolutely. They are more tax motivated. Public entities and NFP? The audit absolutely matters. Too much liability on the shoulders of the CEO, CFO and Boards.