PCAOB Hopes Updating Quality Control Rules Will Maybe Prevent Audit Firms From Constantly Breaking Quality Control Rules
From the earliest days of Going Concern until most recently last month, quality control has been a problematic thing for audit firms. For example, the firm that employed the guy who just got the largest fine the PCAOB has ever given to an individual auditor couldn’t get its quality control systems under control: From 2018 […]
The PCAOB Thinks It Deserves a 12.6% Raise
These days everyone wants a raise that is at least as high as the rate of inflation, which is currently 7.75%. The PCAOB does too. At an open meeting held today [Nov. 18], the Public Company Accounting Oversight Board approved its fiscal year 2023 budget and 2022-2026 strategic plan. […] The 2023 budget is guided by the […]
The Audit Profession’s Inability to Retain Talent Poses a Serious Threat to Audit Quality
Just about every employer in corporate America is singing the blues about talent shortages caused by the Great Reset and the Great Resignation. However, these effects are not being felt uniformly across all businesses. Those employers with a history of mismanaging their human capital, like the largest audit firms, are being hit the hardest. The […]
The PCAOB Ain’t Messing Around No More
After getting rid of the boil on its butt (that boil being ex-chairman William Duhnke) last June, the PCAOB seems to be feeling pretty good now under the leadership of Erica Williams. And that’s bad news for audit firms. The PCAOB has created new ways of disciplining audit firms and auditors who bend the rules, […]
Are Auditors Becoming as Hard to Find as a PS5?
Alternate title: If You Are an Accounting Student, Expect to End Up In Audit When You Graduate Ever since early 2020 we have been forced to learn how to go without, not always an easy task in our always-connected, on-demand, two-day-delivery world. I don’t know about you but if I have to wait longer than […]
Better Late Than Never: PCAOB Fines Ex-KPMG Vice Chair of Audit Scott Marcello $100,000 In Connection With Inspection Scandal
It only took five years, but Scott Marcello finally received some sort of punishment for what happened in KPMG’s audit practice several years ago as partners were working with PCAOB insiders to illegally receive advanced notice of the PCAOB’s inspection plans for KPMG audits. Marcello, KPMG’s former vice chair of audit, was fined $100,000 today […]
Here’s What It Would Be Like If the New PCAOB Members Were Introduced At a Basketball Game
And now … your NEW starting lineup for the Peeee Ceeee Aaaay Ooooh Beeee! From Edinboro University, she has 28 years of experience in public finance, policy development, accounting and auditing, disclosure modernization, data analytics, and technology innovation. A former Deloitter, she has held senior financial roles at the Treasury Department and the University of […]
Two of the ‘KPMG 5’ Barred By the SEC Indefinitely For Being Dirty Cheaters
Ex-KPMG partners David Britt and Thomas Whittle were told by the SEC on Wednesday that their accounting privileges were being taken away for a long time because of their involvement in a multiyear scheme with three other KPMGers to steal regulatory information from the PCAOB to cheat on audit inspections. The administrative proceeding orders released […]
There’s a Coup Going Down as We Speak at the PCAOB
Here’s a nice little Friday news dump for y’all to hand-wring over as we head into the weekend: Securities and Exchange Commission Chairman Gary Gensler has fired the U.S.’s top accounting regulator, a move that is certain to please investor advocates and progressives who had demanded an overhaul of the watchdog. The SEC announced the […]
In Response to Discrimination Claims From Ex-Senior Officer, PCAOB Went on a ‘Deny’ Spree
The PCAOB emphatically denied the allegations made by its former chief administration officer Sue Lee who claimed in a wrongful termination lawsuit that she was the victim of a “xenophobic and racist campaign” against her by Chairman William Duhnke because of her Asian ethnicity. How emphatically did the PCAOB deny Lee’s discrimination accusations? The U.S.’s […]
Lawsuit: PCAOB Chairman (Allegedly) Calling Coronavirus the ‘Kung Flu’ Didn’t Sit Too Well with Senior Staffer Born In China
This seems like ages ago but back in October 2019, the Wall Street Journal revealed what was written in a one-page whistleblower complaint—written by a group of current and former PCAOB employees—that alleged some serious problems going on at the PCAOB under chairman William Duhnke, a Republican who was appointed to that role in December […]
The Truth About Public Accounting, Part II: PCAOB Inspection Hysteria — How to Fix It
While there is a consensus that the PCAOB’s existence has improved audit quality, it is also clear that the PCAOB has contributed an unhealthy level of hysteria to the auditing profession. That hysteria has led some professionals to make horrible choices (as seen in the KPMG inspection selection leak scandal). That hysteria has also driven […]
FASB and PCAOB Do a Poor Job on Diversity and Inclusion
I’ve spent a good portion of my career monitoring the accounting and auditing standard-setting world and Big 4 firms. So, I read with great interest the letter to the editor to Going Concern on whether the Big 4’s equity, diversity, and inclusion (EDI) efforts are corporate BS. It made me think about the FASB and […]
Last Indicted Ex-KPMG Partner to Be Sentenced In PCAOB Scandal Won’t Be Going to Prison
Almost three years after being indicted for his involvement in one of the biggest ethics debacles in public accounting history, former KPMG partner Thomas Whittle was sentenced today to two years of supervised release. And that’s all, folks. The six accountants who were charged with fraud and conspiracy by the feds on Jan. 22, 2018, […]
No Jail Time For Another One of the ‘KPMG 5’ Indicted In PCAOB Scandal
When former KPMG partner Thomas Whittle goes before U.S. District Court Judge J. Paul Oetken to hear his sentencing, scheduled for Dec. 2, he will be the last of the five ex-KPMG executives who were indicted in January 2018 for their roles in a scheme to steal confidential audit inspection information from the PCAOB to […]
KPMG Fined $1.3 Million By the California Board of Accountancy For Lots of Unethical Stuff
[Updated on Nov. 3 with statement from KPMG.] Here’s some more news pertaining to the KPMG/PCAOB cheating scandal that I wasn’t expecting to post about today: KPMG has to pay a $1.3 million fine to the California Board of Accountancy for bending the audit inspection rules a handful of years ago AND for auditors cheating […]
Ex-KPMG Partner Thomas Whittle Is Up Next For Sentencing In PCAOB Scheme
Former KPMG partner Thomas Whittle—one of the five decision-makers at the House of Klynveld who were indicted in January 2018 for making the very poor decision to steal confidential information on which clients’ audits the PCAOB would be reviewing so KPMG could improve its dismal inspection results—is scheduled to be sentenced on Dec. 2, according […]
Ex-KPMG Partner Given Slap on the Wrist From Judge During Cheating Scandal Sentencing
Adrienne mentioned this in Footnotes on Friday, but just in case you missed it, former KPMG partner David Britt won’t be serving any time behind bars for his role in the audit firm’s scheme to cheat the PCAOB inspection process a handful of years ago. Instead, Britt, 57, who is a resident of North Carolina, […]
FYI: One of the ‘KPMG 5’ Is Scheduled to Be Sentenced on Oct. 9 (UPDATE)
[Article updated with new sentencing date.] A Manhattan federal court judge will decide next month whether former KPMG executive David Britt should spend some time inside a jail cell for his involvement in a scheme to steal secret audit inspection information from the PCAOB. But if Britt, former co-leader of KPMG’s Banking and Capital Markets […]
Accountants Behaving Badly: Whitley Penn and 3 CPAs Fined, Misappropriation and Mail Fraud, Gambling Away Client Money
PCAOB fined Whitley Penn $200,000, three CPAs for really crappy auditing Back in March, the PCAOB disciplined top 45 firm Whitley Penn and three of its partners for ignoring the fact that there are PCAOB rules in place for public issuer audits. With all the coronavirus hysteria that has been going on, we failed to […]
Even the PCAOB Is Now Hunkering Down at Home
This was just emailed to us by the PCAOB and has since been posted to its website. In case you haven’t heard yet, the PCAOB is going the mandatory work-from-home route too, effective immediately. The message says: The Public Company Accounting Oversight Board (PCAOB) is providing the following update on our current operations in light […]
Whistleblowers Would Like the House Financial Services Committee to Have Speaks About the PCAOB
While all this talk has been going on about the uncertain future of the PCAOB, a letter was sent on Feb. 10 to the chairs and ranking members of the House Financial Services Committee and the House Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, asking that a hearing be called for lawmakers to discuss […]
Critical Audit Matters: The Games Are On
As a guest here recently I took a look at the accumulating experience with extended auditors’ reports—the additional paragraphs that under international standards describe key audit matters (aka critical audit matters under the Public Company Accounting Oversight Board’s standards in the United States). There I noted a major gap—nobody has yet asked whether investors actually […]
This Halloween Costume Is Here to Haunt the PCAOB’s Dreams
Happy Halloween, everyone! Apologies if you do actually work for @KPMG, but you're this year's #halloween costume #companyhorror pic.twitter.com/B4N09PCs7W — 𝕯! (@darrynvdwalt) October 28, 2017
Senators to SEC Chair Jay Clayton: What the Hell Is Going On At the PCAOB?
It seems we weren’t the only ones who were disturbed by the Wall Street Journal article last week detailing the dysfunction at the PCAOB under the tremendous leadership of chairman and meetings hater William Duhnke. In a letter dated Oct. 17 to SEC Chair Jay Clayton, Sens. Sherrod Brown (D-OH) and Jack Reed (D-RI) called […]
Critical Audit Matters: Does Anybody Care?
As if the standard auditor’s opinion weren’t already sleep-inducing enough. Standards in the United States now require auditors to identify critical audit matters (CAMs) in their reports on the financial statements of large public companies—things that, in the language of Auditing Standard 3101.11 of the Public Company Accounting Oversight Board, involved “especially challenging, subjective, or […]
State of the Profession 2019: We Need to Talk About Accounting’s Big PR Problem
Not sure if anyone’s noticed but the profession is in trouble. You know it’s bad when the most cynical of cynics feels compelled to say yeah, this is kinda actually bad. Sure, I’ve talked plenty of smack over the years but I’ve also been one of the profession’s biggest cheerleaders, lifting up future CPAs when […]
At Least EY’s 2017 PCAOB Inspection Report Is Not as Not Good as KPMG’s
The PCAOB just released EY’s 2017 inspection report, and there’s some good news and some bad news for the Black and Yellow. The good: Congrats, EY, your audit deficiency rate of 31% is below your historical average deficiency rate of 32%. Of the portions of 55 issuer audits PCAOB inspectors reviewed during 2016, 17 weren’t […]
What Price Wrong-Doing? Sanctions Against KPMG Are Complicated
“Sell in May and go away” was an investors’ adage invoked as vacation strategy in a more genteel era. Returns in the summer were said to lag the rest of the year—and in any event, that’s how brokers justified their holiday cottages on the eastern seaboard. This year the maxim has twice failed my attempt […]
SEC Says $50 Million Fine For KPMG Is ‘Significant’ and ‘Appropriate’ For All That Cheating Going On
The SEC made official today the news that Dave Michaels of the Wall Street Journal broke late last week, announcing that KPMG will pay $50 million to settle allegations that former partners “stole the test” by using confidential information that was being fed to them by a PCAOB insider to improve the firm’s performance on […]
$50 Million Fine SEC Is Reportedly Giving KPMG Over PCAOB Scandal Isn’t Big Enough
Dave Michaels of the Wall Street Journal broke some huge news late last night about a huge fine the SEC could levy against KPMG later this month because of several former partners’ involvement in one of the biggest U.S. accounting scandals in recent years—stealing secret audit inspection information from the PCAOB. KPMG LLP is preparing […]
Ex-KPMG Executive Director’s Sentencing Put Off Until June
We won’t know until June at the earliest how much prison time former KPMG executive director Cynthia Holder will get for her involvement in a scheme to steal confidential audit inspection information from the Public Company Accounting Oversight Board. Holder was supposed to be sentenced in Manhattan federal court on April 5, but her sentencing […]
KPMG Bermuda’s Head of Ethics Fined By the PCAOB For Being Unethical
Here’s a fun story of what not to do if you’re an ethics director at a Big 4 firm. Damion Henderson, a managing director at KPMG Bermuda, was fined $10,000 by the PCAOB on April 9 for signing off on documents that had been re-created and backdated in advance of a PCAOB inspection and not […]
The Person At the PCAOB Who Auditors Feared the Most Is Now Their Friend
In an interesting turn of events, Claudius Modesti, who was the head enforcer at the Public Company Accounting Oversight Board for 14 years before leaving last May, will now be defending audit firms that run afoul of the PCAOB and the Securities and Exchange Commission in his new role with law firm Akin Gump Strauss […]
PCAOB Hands the Keys to Chief Auditor’s Office to Deloitte’s Megan Zietsman
The Public Company Accounting Oversight Board has been without a full-time chief auditor and director of professional standards since the end of May, when Martin Baumann resigned after spending nine years in that role and 12 years at the PCAOB. For the past six months, Deputy Chief Auditor Barbara Vanich has filled that position on […]
Deloitte Mexico Auditors Attempt to Phone in Sloppy Audit Work, Fail
The PCAOB has barred, fined, and censured three Deloitte Mexico audit partners for their role in the absolute bamboozle of an audit on Prestaciones Finmart, a Mexican subsidiary of Texas-based EZCORP, Inc. Finmart accounted in FY 2013 and FY 2014 for approximately 21% and 26% of EZCORP’s consolidated assets and approximately 23% and 42% of […]
Former PCAOB Chief Auditor Martin Baumann Backs Out of IAASB Gig
Last month, we reported that Martin Baumann, the former chief auditor and director of professional standards at the Public Company Accounting Oversight Board, was going to be the next chair of the International Auditing and Assurance Standards Board. But due to “unforeseen personal circumstances,” he’s decided not to take the job. In a statement, Baumann […]
Ex-KPMG Partner Pleads Guilty to Using Stolen PCAOB Inspection Information
The former national partner-in-charge of inspections at KPMG pled guilty on Oct. 29 for his involvement in a scheme in which the Big 4 firm repeatedly used stolen confidential Public Company Accounting Oversight Board information to cheat the regulatory inspection process. Thomas Whittle, 55, pled guilty to wire fraud and conspiracy charges, pursuant to a […]
Ex-KPMG Executive Director Admits Guilt in PCAOB Inspection Leak Scandal
A former Public Company Accounting Oversight Board inspector-turned-KPMG executive director, who was accused of obtaining confidential information on which KPMG clients’ audits the PCAOB would be reviewing so the Big 4 firm could improve its dismal inspection results, pleaded guilty in Manhattan federal court on Oct. 16 for her involvement in the scandal. Cynthia Holder, […]
PCAOB Fines Deloitte Canada $350,000 for Breaking Independence Rules Thrice on Audits of Banro
Deloitte Canada scored a hat trick of sorts on Oct. 16, but I doubt it was celebrated among the firm’s management. The firm was censured and fined $350,000 by the Public Company Accounting Oversight Board on Tuesday for failing to maintain independence during its 2012, 2013, and 2014 audits of Canadian gold-mining company Banro Corp. […]
KPMG Adds Retired Four-Star Air Force General to Its One-Star Board of Directors
No, it wasn’t Pope Francis, Malala Yousafzai, or the ghost of Nelson Mandela, as Caleb suggested last April, but KPMG U.S. on Oct. 4 appointed retired Air Force General Janet Wolfenbarger as the firm’s first independent director to its board, nearly nine months after five former KPMG executives were indicted for their roles in an […]
Those Who Know, Know BDO … Sucks at Auditing
So, the latest PCAOB inspection report of BDO USA is out, and man, it’s bad. You know it’s bad when even KPMG can do better. Well, at least according to the most recent available report, we’re still waiting on the suspiciously absent 2016 KPMG PCAOB inspection report. Anyhoo, back to BDO. They’re no strangers to […]
Martin Baumann Found a Job at Another Auditing Standard-Setter With a Five-Letter Acronym
Nearly four months after he left his position of chief auditor and director of professional standards at the Public Company Accounting Oversight Board (PCAOB), Martin Baumann has a new gig: chair of the International Auditing and Assurance Standards Board (IAASB). Baumann, who was appointed to a three-year term that begins on Jan. 1, 2019, replaces […]
Where, Oh Where, Is KPMG’s 2016 Inspection Report?
KPMG’s 2016 inspection report has still not been published by the Public Company Accounting Oversight Board, and the PCAOB won’t say why—or if the report will ever see the light of day. Compliance Week reports: The Public Company Accounting Oversight Board published its 2016 inspection results for Deloitte in December 2017 followed by reports for EY […]
Federal Judge Strikes Down Ex-KPMG Partners’ Request for SEC Evidence Search
If you’re dying to know what’s going on with David Britt, David Middendorf, and Thomas Whittle, the former KPMG partners who are accused of participating in a scandal in which confidential Public Company Accounting Oversight Board inspection information was leaked to the accounting firm, Law360 has an update: A group of former and would-be KPMG auditors […]
PCAOB Told SEC ‘Hold My Drink,’ Went All Enforcement-Crazy on Accountants in 2017
2017 was a banner year for the Public Company Accounting Oversight Board when it came to enforcement actions against accountants. For the Securities and Exchange Commission, not so much. The PCAOB finalized 35 enforcement actions involving “accountants”—otherwise known as CPAs employed by SEC registrants, auditors, and audit firms—last year, up from 28 in 2016, according […]
Broker-Dealer Audits Are Still Sloppy, But Hey, Auditor Independence Violations Are Down, So That’s Something
The Public Company Accounting Oversight Board released its report on 2017 inspections of broker-dealer audits on Aug. 20, and once again, there was some disappointing news for those who champion audit quality. According to a PCAOB press release: In this inspection period, the PCAOB inspected 75 audit firms and reviewed portions of 116 audits and […]
If You’re Really Big Into Commenting on Five-Year Strategic Plans, the PCAOB Wants to Hear From You
It’s been a slow day around GC HQ, and the weekend is almost here. But before we go, here’s a riveting article on the Public Company Accounting Oversight Board’s draft of its five-year strategic plan, which is now open for public comment. In a nutshell, a survey was sent out last April asking investors, auditors, […]
Michael Stevenson Latest to Bid Adieu to the PCAOB
Another one bites the dust. This time it’s Michael Stevenson, longtime Public Company Accounting Oversight Board deputy general counsel. Stevenson, who joined the PCAOB in 2003, had served as deputy general counsel since March 2007, according to a July 24 PCAOB press release that announced his departure. During that time, Stevenson “provided legal counsel in […]
Setback in Court For Ex-KPMG Execs, As Judge Refuses to Toss Out Counts in PCAOB Inspection Info Leak Case
As Mick Jagger sings, “You can’t always get what you want.” What three former top KPMG executives and two former employees of the Public Company Accounting Oversight Board—who are accused of participating in a scheme in which confidential PCAOB inspection information was shared with the accounting firm—wanted was for their conspiracy and wire fraud counts […]
KPMG Used Confidential Inspection Info to Snatch BBVA Away From Rivals, Report Says
If you missed this late last week, Francine McKenna of MarketWatch detailed how KPMG used access to confidential Public Company Accounting Oversight Board inspection information to poach a client from its Big 4 rivals. The client, Spanish bank BBVA, was one of nearly a dozen KPMG clients caught up in the audit inspection scandal. Others […]
Report: Court Documents Name KPMG Audit Clients Caught Up in PCAOB Leak Fiasco
MarketWatch reporter and friend of Going Concern’s, Francine McKenna, wrote an outstanding article today after digging through court documents obtained by MarketWatch that name the audit clients caught up in the KPMG audit inspection conspiracy. And there are some pretty big names. The Justice Department in January brought criminal charges against five former KPMG executives […]
SEC Chief Accountant Wesley Bricker Had Nice Things to Say About Management Accountants
Not that he would really say anything bad about management accountants since he was at the Institute of Management Accountants’ annual conference, but Securities and Exchange Commission Chief Accountant Wesley Bricker threw some bouquets their way during a speech on June 19. From Accounting Today: “As management accountants, your work is vital to the financial […]
Foreign Affiliates of Big Audit Firms Screwed Up Some Stuff
The Securities and Exchange Commission fined foreign affiliates of BDO, Deloitte, and KPMG for skirting oversight of the PCAOB. Here’s the skinny: According to the SEC’s orders, the Zimbabwe affiliates of Deloitte & Touche and KPMG improperly audited the majority of assets and revenues of a publicly traded company without registering with the PCAOB. The […]
All the Gory Details From the Indictment of Former KPMG Partners
If you’re not one of the six accountants who was criminally or civilly charged today, then you’re having a good Monday. And if you’re still not convinced, let’s peruse the details from the criminal indictment so you can feel better about yourself. The allegations paint a pretty sad picture of some prominent audit professionals at […]
Former KPMG Employees Learn That Using Confidential PCAOB Inspection Info Has Its Drawbacks
Six former employees of KPMG have been arrested and charged “with conspiring to defraud securities regulators and misuse of confidential auditing information.” These charges stem from the leak of confidential PCAOB inspection information that we learned about last year. The Securities and Exchange Commission also filed civil charges in a parallel action. The 54-page indictment lists […]
PCAOB Inspection Reports Are Practically Beach Reads Now
Over the years, people have complained — myself included — that PCAOB inspection reports were not exactly useful documents. Sixty-odd pages of audit and legalese don’t exactly make for riveting content. However! In the new EY and PwC inspection reports that were released today, you’ll note executive summaries that list tables for the “Effects of […]
Grant Thornton Gets Dinged for Giving Partners with Audit Quality Issues More Work
The Public Company Accounting Oversight Board has announced a big settlement with Grant Thornton over quality control violations and audit failures. The firm was censured and agreed to pay a $1.5 million civil penalty. The quality control violations related to the assignment of two Philadelphia-based partners to audits in 2013 when they had been cited […]
We Might Have New PCAOB Member Nominees Soon, Someday, Maybe
Just keeping it warm. Dave Michaels reports at The Wall Street Journal that SEC Chairman Jay Clayton’s preferred choice to lead the PCAOB is rumored to be the same person everyone thought it would be: SEC Chairman Jay Clayton wants William Duhnke to become the PCAOB’s next chairman, according to one of the people familiar […]
PCAOB Inspection Reports Have Been MIA Lately
Here’s something odd that was brought to our attention: @going_concern @PCAOB Why has the PCAOB not posted an inspection report on their website since July? pic.twitter.com/nMZzKFEB0q — Know Your Audience (@csilvey) December 1, 2017 Sure enough, if you cruise the PCAOB’s Firm Inspection Reports page, you’ll find that the last report was for Crowe Horwath’s […]
PCAOB Giving Big 4’s Legal Services the Stinkeye
PwC announced last month that it was launching a law firm in the U.S. because, honestly, who’s going to stop them? Plus, Deloitte wasn’t going to do it, so someone was bound to snatch up the opportunity. PwC’s U.K. affiliate even put out a report recently that found “law firms are not keeping pace with […]
The PCAOB Could Look Very Different, Very Soon
Get a good look, people. Anyone interested in becoming a PCAOB member? It sounds like there’s a bunch of change coming, based on the public statement from new SEC Chairman Jay Clayton: I am very pleased that Chairman [James] Doty has agreed to continue to serve as the Chairman of the PCAOB as we commence […]
PwC’s 2017 to Forget Tour Rolls On
PwC, the Big 4 accounting firm most likely to request a mulligan on 2017, has been censured and fined $1 million by the PCAOB for violations in its audit of Merrill Lynch. The PCAOB order follows a SEC action against Merrill from last year after the broker “held tens of billions of dollars” of customer […]
Big 4 Audit Quality Hiding in Plain Sight: Restatement Mentions in PCAOB Reports
For the last several years, one very interesting audit quality metric has not been widely reported in the media, and the largest audit firms barely mention it. It has been hiding in plain sight and could be a useful data point to audit committees or investors that are trying to understand the quality of audits. […]
Six KPMG Employees Fired After Leak of PCAOB Inspection Info
Updates to report that individuals were terminated appear throughout. Welp, this looks bad. The Wall Street Journal reports that six KPMG employees, including four partners and the firm’s head of audit, have been fired after a PCAOB employee leaked confidential inspection details to the firm. The departing KPMG employees include four partners and Scott Marcello, […]
Big 4 Auditors Are Probably Looking Forward to More Amiable PCAOB
Michael Rapoport reports in the Wall Street Journal on the waning James Doty era at the PCAOB and that he will probably exit with unfinished business: Mr. Doty, chairman of the Public Company Accounting Oversight Board, may only have months left to pursue his wish list, including a change that would require auditors to tell […]
Exposure Drafts: It’s PCAOBeginning To Look A Lot Like Christmas
Exposure Drafts appears every other Wednesday. Send comments and suggestions to [email protected]
Deloitte’s Brazil Firm Covered Up a Couple of Bad Audits
The big news in the international audit firm world today is an announcement by the PCAOB that Deloitte’s Brazil firm audited badly and then covered up that bad auditing, which is also bad. The whole thing involved a dozen auditors including the Brazil firm’s former Audit Practice Leader, former Risk and Reputation Leader and former […]
The Trump Administration Will Drain the PCAOB Swamp
The election of Donald Trump is likely to transform the Public Company Accounting Oversight Board (PCAOB). While the PCAOB is technically a non-partisan private regulator, it will not likely escape Trump’s commitment to drain the swamp. Jim Doty’s term as PCAOB chairman expired in October of 2015. The PCAOB chairman is nominated by the SEC […]
PCAOB Unsure About Motives Behind Audit Firms’ Fancy New Thingamajigs
The Big 4 has been attempting to bring sexy back to auditing for awhile now, with leaders talking about innovation this and technology that, data this and 100% testing that. And that's cool, auditing needed the confidence boost, since advisory's been strutting around getting all the attention for the last decade. So yeah, we've noticed […]
Partner Names: Coming to an Audit Near You in 2017
After nearly seven years since the first concept release, the SEC approved the PCAOB's rules for disclosing the names of audit engagement partners and other participating firms. You can read the entire SEC order if you find the securities regulation apparatus fascinating. Personally, I think it's interesting that another round of comments is allowed prior […]
PCAOB: Just Stop Altering Audit Workpapers Already
Are you an auditor? Do you have any public company clients? Have you recently been notified that the PCAOB will be inspecing the audit of one of those public company clients? Are you now just remembering that you may have left something out of the audit documentation that would definitely get you in trouble with […]
Audit Firm Violates Independence Spectacularly
Has it been awhile since we've discussed an egregious independence violation committed by an audit firm? Yes, I think it has. The drought ends with this PCAOB disciplinary order in the matter of Moss, Krusick & Associates ("MKA") and Joseph M. Krusick, CPA. Krusick was the engagement partner on Credit One Financial, Inc. a company […]
Comp Watch ’16: PCAOB
PCAOB Chairman James Doty had the pleasure of presenting a budget to the SEC today and it probably could've gone better. I'd say that any time you're asking people for money it can be a little nerve-wracking, but this is the federal goverment! There's virtually no chance that you won't offend someone no matter how […]
SEC in No Rush to Make a Decision on PCAOB Chair
SEC Chair Mary Jo White said that she'll wait until two new commissioners are appointed before deciding on whether James Doty will remain the head of the PCAOB. Currently, the SEC only has three commissioners after Dan Gallagher and Luis Aguilar both left last year. But how long do we have to wait?! That all […]
Big 4 Firms Still Getting Used to This Whole Regulation Thing
Sometimes I get the impression that the Big 4 don’t fully appreciate what the PCAOB is supposed to do as a regulator. Now, please don’t confuse “appreciate” with “like.” The Reuters report from yesterday makes it perfectly clear that the firms don’t like what the PCAOB does at all. What’s become obvious, though, is that […]
PCAOB Unanimously Approves Auditor Disclosure Rule
Update below specifies the timing of the rule’s effect. As promised, the PCAOB is dropping its auditor disclosure rule with 9 shopping days left until Christmas. It's been quite a haul as the Board has been working this project since 2008 after the Treasury Department's Advisory Committee on the Accounting Profession recommended that audit partners […]
PCAOB Finally Gonna Vote on Partner Disclosure
The PCAOB announced earlier today that it will hold an open meeting next Tuesday to vote on the disclosure rules for naming the audit partner and other accounting firms that participated in the audit. I'm told that it will be a unanimous approval. With that in mind, it's more than a little bit ironic that […]
What’s On Your Audit Partner Disclosure Wish List?
Earlier this week, we learned about a couple of Grant Thornton audits that were less than perfect. The partner on those engagements, Melissa Koeppel, had a poor track record with four restatements in two years, including the one that resulted from the infamous Koss Corporation fraud. No one outside of Grant Thornton had knowledge of […]
PCAOB Member Wants a Closer Look at Tax Services and Auditor Independence
Last week the PCAOB approved its 2016 budget and also its "strategic plan" through 2019. That might sound like a more potent sleeping aid than tryptophan, but sometimes board members say interesting bits worth sharing and, today, we have some for you. Each of the board members made pretty benign statements — quibbles about the […]
Auditors, PCAOB Earn Attaboys From SEC Chief Accountant
SEC Chief Accountant James Schnurr says that, although "there's room for improvement" audit quality "is getting better" and the PCAOB has "deepened their expertise" and "their inspection process has matured." This explains why we've seen more deficiencies, he says. I'm sure KPMG appreciates the vote of confidence. [AT]
What’s the PCAOB’s Next Move on China?
Earlier this week, we learned that the PCAOB was dealt a blow last month when their negotiations with China fell through. Paul Gillis weighed in earlier today with a grim prognosis: There are no good options left for the PCAOB. Successful short seller attacks indicate that fraud and auditing failures continue to be a problem […]
So Much for the PCAOB Inspecting Audit Firms in China
Welp. After years of negotiation and Chairman Jim Doty saying this past summer that the PCAOB was "very close" to reaching an agreement to inspect audit firms in China, this happened: Last month, a final agreement that would have allowed a U.S. regulator to examine the audits of Chinese companies listed on American stock exchanges […]
Reminder: Auditors Can’t Check Their Own Work
A superfecta of PCAOB enforcement orders hit the air yesterday, so let's take a looksee, shall we? Let's start with Turner, Jones and Company, featuring their managing partner Stephen Turner and regular ol' partner Mark Turbyfill. I'll be referring to them collectively as "Turn & Turb" from here on out. Turn & Turb did a […]
More Twists in the Race to Be The Next PCAOB Chairman
John White, a prominent lawyer with Cravath, Swaine & Moore, sits on the PCAOB's Standing Advisory Group. His wife, Mary Jo, chairs the SEC. She, along with the other commissioners, will choose the next PCAOB chair. Some people don't like how that looks: The Center for Effective Government, an advocacy group, said White should step […]
Coming This Christmas: A Final Rule on Audit Partner Disclosure
In an Investor Advisory Group meeting held earlier this week, PCAOB Chairman James Doty said he hoped the third version of the Board's partner naming proposal would be finalized "by the end of the year." That should help the IMA fathom such an "insult to the accounting profession." [CW (Sub. req.)]
‘An Insult to the Accounting Profession’ and Other Highlights From Comments on the PCAOB’s Proposal to Disclose Names of Audit Firm Partners
Yesterday was the deadline for commenting on the PCAOB's concept proposal for disclosing the name of audit partners and "other participants in the audit." If this sounds familiar, it's because this was Plan C from the PCAOB (fourth round of comments) on this proposal and, miraculously, audit firms seem willing to live with disclosing partner […]
PCAOB Official Doesn’t Want Anyone To Freak Out But Holy Schnikes, Broker Dealer Audits Are Bad
If you read the PCAOB's press release on its annual inspection of broker-dealer audits, you sense disappointment: For inspections conducted in 2014, PCAOB staff identified independence findings in 26 of the 106 audits selected for inspection, primarily related to assisting with the preparation of financial statements. Twenty of those audits were performed by firms that […]
PwC Out of the Running for This Year’s “Worst Performance By a Big 4 Audit Firm”
The PCAOB, bless their hearts, released a forgettable inspection report from PwC today. The deficiency rate, 29%, is still in the range we're used to, but was lower than last year, so that's something. Michael Rapoport reports that this deficiency rate is better than EY's (36%) but not as good as Deloitte's (21%) and that […]
PCAOB Inspection Report Shows That EY’s Auditing Is Still Bad
Maybe you've noticed, maybe you haven't, but PCAOB inspection reports have loads more information in them than they used to. They have several tables that summarize deficiencies by audit standards, financial statement accounts/audit areas and industry. They also throw in pie charts to show the breakdown of the industries and revenues ranges of the companies […]
PCAOB Going with Plan C for Naming Audit Partners
In a speech given yesterday, PCAOB Chairman James Doty said that the Board will seek comment on a third proposal for naming the lead audit partner. Doty recounts the journey so far, including the concept release that "consider[ed] engagement partner signature in 2009," the proposal for "mere disclosure" in 2011 that they sought comment on […]
PCAOB Was Born That Way
At the Wall Street Journal's CFO Network event yesterday, a nameless CFO asked SEC Division of Corporate Finance, Keith Higgins, “What gives with the PCAOB? Do they really mean to be slow and not transparent?” Although Mr. Higgins acknowledged that, "We've heard that concern," the correct answer is, "Yep! That's how audit firm lobbyists designed it!" […]
Senators Taking Another Crack at Making PCAOB Proceedings Public
Senators Jack Reed (D-RI) and Chuck Grassley (R-IA) introduced a bill in 2011 that would make PCAOB disciplinary proceedings public. Like many bills in this political climate, it went precisely nowhere. Reed and Grassley, not unfamiliar with the excruciating pace of the legislative process, are gonna try to get some momentum behind this idea again […]
What Career Questions Do You Have for the PCAOB’s Director of Inspections?
As we've discussed, it's time for you to look for a new job; yes, even if you're not interested in leaving your current gig. For the auditors out there, you may or may not have considered the possibility of joining the PCAOB. While the mere mention of the Board causes some auditors to fly into […]
The SEC Finally Got Around to Sanctioning Big 4 Firms in China
The SEC has been pretty busy lately, what with tongue-lashing the PCAOB about their duties and all. But somehow they found time in their busy schedule to get around to that whole sanctioning Big 4 affiliates in China thing: The Securities and Exchange Commission today imposed sanctions against four China-based accounting firms that had refused […]
SEC Tired of Telling the PCAOB How to Do Their Job
Colin buried this one in ANR this morning but let's trot it out into the light where it belongs. Michael Rapoport writes for the Wall Street Journal: Renewing criticisms from December, SEC officials said the Public Company Accounting Oversight Board should be focusing on enacting rules governing the nitty-gritty of how auditors do their jobs. […]
Going Concern Presents: The Worst of Auditing 2014
Another day, another "year in review best of" list. Except this list is actually the "worst of" 2014. It's been an exciting year for auditing. PCAOB inspection rates were some of the worst to date, and then there was that whole thing where an audit partner was banging the Chief Accounting Officer at the client's. […]
Duh of the Day: Consulting Work by Audit Firms Could Possibly Impair Audit Integrity
The rise of non-audit services offered by accounting firms could threaten the quality and integrity of independent audits, said Steven Harris, a key member of the government’s watchdog agency. Although the Securities and Exchange Commission has limits on the kinds of consulting and advisory work audit firms can perform for their clients, that line may […]
The PCAOB Has a New Five-Year Strategic Plan For You Guys to Critique
Nearly three weeks after getting reamed out publicly by SEC Chair Gary Gensler for being way too slow to update auditing standards that had been in effect BEFORE the PCAOB was created by the Sarbanes-Oxley Act, everyone’s favorite audit regulator released a draft of its five-year strategic plan, which includes four goals they hope to accomplish from […]