Let’s not jump to the conclusion that the PCAOB will scrap the whole auditor sign-off proposal just yet. They’ve been doing a hell of a job making auditors’ lives difficult lately and the Board probably wants to feel like it’s an important part of the bureaucracy. Especially since their lives are potentially at stake.
But the belly-aching on this one by the usual suspects is reaching fever pitch. They are saying enough is enough and that their partners’ names should not be written in blood for all to see.
It shouldn’t surprise anyone that the firms hate this idea since the owners of the firms are being given explicit instructions to put their names — and asses — on the line.
The PCAOB received a grant total of 23 comments on the concept release and all but two were negative. Not surprisingly, the two that weren’t negative came from “investor representatives”.
Francine McKenna gave you the lowdown on the firms responses in her GC post from September 30 and it sounds like it’s working.
Here’s a quote from PCAOB Deputy Chief Auditor Greg Scates:
“The board is going to discuss this and make some decisions in this fourth quarter on what to do and whether to move forward in this area. This is not uncommon in Europe. Partners do sign the report in other countries. In our country, of course, this is not the way we’ve been doing business, so it is a new concept. We’ll see what the board wants to do as they look through the comment letters and make a decision on what to do.”
A whopping 21 negative comments and the PCAOB is getting cold feet? Get better at spreading the word to people that will take your side, PCAOB. Were you just testing the waters with this or did you really want to make auditors accountable?
But maybe the firms got the Board members’ personal side:
Even more disturbing than the potential liability exposure is the specter of individual auditors coming under public attack by disgruntled investors and a “lynch mob” media mentality. “Engagement partners and their families could be subject to unwarranted and unwelcome communications from shareholders who are unhappy with a particular company’s performance in matters that are wholly unrelated to the completeness and accuracy of the financial statements,” Grant Thornton warned.
There are a lot of irrational people out there we’ll give you that, but a media circus outside an auditor’s house? Sort of like a bean counter paparazzi? That could be kind of fun, couldn’t it?
Oh, but what about the websites that would get put up?:
Groveland, Mass.-based CPA Frank Gorrell, for one, warned that identifying engagement partners by name could prompt irate investors to set up Internet sites to “vent their frustrations” by criticizing individual accountants and even publishing their home addresses online.
Sweet Jesus. Apparently accountants want to be invisible. No criticism for me, thankyouvermuch. And venting frustrations? On a website? Who ever heard of such a thing?
AUDIT FIRM REGULATION: No Autographs [Web CPA]
PCAOB May Scrap Auditor Sign-off Proposal [Web CPA]