Last week the Securities and Exchange Commission charged Friedman LLP with with improper professional conduct for failing to comply with the standards of the Public Company Accounting Oversight Board while conducting audits of two public companies from 2017 through 2020. Friedman has agreed to settle the charges and will pay approximately $1.5 million in total […]
From the mailbag:
Just thought I’d share some developments from the audit world. Some financial institutions which respond to our audit requests are adding disclaimers such as the following:
“…The recipient acknowledges that [the respondent] does not represent and warrant that the information is complete and accurate. The recipient further acknowledges that the information may not disclose the entire relationship between the customer and [the respondent]…”
Basically, this is making the confirmation process entirely pointless as banks are saying that even if they sign and respond to a confirmation, they aren’t guaranteeing that their response actually means that the balance is accurate. They are also doing this in the fine print attached to a lot of confirmations so it wasn’t entirely obvious until some people started actually reading that fine print. This is causing issues as we can no longer rely on these confirmations for our audit procedures if they contain such a disclaimer.