If you’re the partner on an engagement and you know, deep down in your plums, that the numbers are fine, you probably get pretty anxious to sign off on this bad boy. You want to go on vacation or a golf date with Phil or – if they’re lucky – spend some time with the family. With that in mind, it’s not so unusual that he/she might jump the gun a little and slap down the Johnnie Hancock before all the work gets done.
Unfortunately, as anyone studying for the audit section of the CPA exam will tell you, this is against the rules.
But hey! If the numbers are hunky-dory, there’s not much cause for concern and everyone has a good laugh:
In the case of KPMG, the FRC’s Audit Inspection Unit looked at 15 audits and found that in three cases the auditor’s report had been signed too soon. Significant changes were subsequently made to the accounts in one case.
Paul George, director of auditing at the FRC’s Professional Oversight Board, which includes the AIU, said the early sign-off problem was not limited to KPMG: “It is a profession-wide challenge to some degree.”
KPMG said it accepted the AIU’s comments. “We are pleased to note that in no case did they think that the audit opinion we issued was incorrect,” said Oliver Tant, head of its UK audit arm.
See? It happens everywhere! Plus, it’s not like accounting and auditing are based on rules that anyone takes that seriously, anyway.
Okay, sure signing off early on 20% of the audits sampled sorta looks bad but at least the numbers weren’t wrong. It would be really awkward to explain that.
Watchdog raps KPMG over early audit sign-off [FT]