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November 27, 2022

PCAOB vs Public Accounting (War)

Ed. note: This is Lee St. Mark's second submission as we chug along in the Going Concern freelancer finals. His initial submission can be found here. You know what to do.

It's no secret – the PCAOB tears at the soft underbelly of the accounting industry on a daily basis. I've seen them show up to the office – they roll in with their PCAOB bags and look like they are about to save the world. I've found nothing further from the truth. I really think they come in thinking that they are going to change the world by looking at an audit file. They aren't. In fact, they make the lives of public accountants worse while providing little value add to those who they are supposed to serve: the public.

Let's start with the fact that many of them are rejects of accounting firms. They've been relieved of their audit services and are looking for a bit of sweet revenge. Well, they picked the right place. Further, many of them took "huge raises" to go to the PCAOB. That's like Colin shutting down GC and saying "I got a huge raise from the B4 and I am going back to public accounting" – it is sad and a definite step down in the career ladder. Or, your client thinking that auditors are actually there to uncover fraud: NOPE.

The anger of their rejection (as noted above) jades their view on the world – not just public accounting. I've been in a review by the PCAOB before and let me tell you – it is not a fun time. The general consensus is that they seem to be the smartest people on the planet. I am guessing that Einstein might object and Freud would have a theory – but don't ask the PCAOB suckers in your conference room – they'll just add that to the bevy of comments they impose upon your firm. It isn't like they really audit – they look at your workpapers, ask ridiculous questions that may or may not be related to your audit, then issue a report after 18 additional months. Typical government operation. It isn't perfect but enough people tolerate it to get away with the boondoggle.

It isn't only the fault of the PCAOB. Its is also the fault of the accounting firms. There is a constant fear of "The PCAOB might ding us if we do something this way." If the audit is done right, everything will work out. Even if you have to put a noob in the room to explain. It is time for auditors (Partners) to stand up to the PCAOB and let them know, enough is enough. However, it's a tough thing to do since they'd just add that to their report…

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