Who’s Ready for Changes to the Auditor’s Report?

Posted on by Caleb Newquist

“We heard from investors that they want more information in the auditor’s report. Investor dissatisfaction with the current auditor’s reporting model should concern other constituents as well, including preparers, auditors and regulators,” said PCAOB Chairman James R. Doty. “Today’s report from our own staff, based on their discussions with a broad audience, will be vital to the Board’s effort to develop a meaningful proposal for change in a concept release. Our intention is to expose such a release as early as this summer.” [PCAOB]

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Audit Room Etiquette: Three Faux Pas That Make Your Co-workers Hate You

Since we marked the countdown to the first SEC deadline of busy season yesterday, let’s tackle an important issue.

Sitting in close proximity of the same people day after day, night after night tends to wear on a person (and if you happen to be sleeping with them, it’s worse).

You start noticing the most mundane, yet painfully annoying habits of your fellow auditors and they can drive you up the boringly-beige wall. Pretty soon, assault and battery seems like your only course of action. We ask that you refrain from beat downs (it’s just not considered good professional to batter your co-workers these days), but it is, of course, your God-given right to gripe about it and share your gripes behind the offending co-workers’ back.

But before you get too high and mighty, are you absolutely sure you’re not one of the annoying ones? We consulted another former audit room survivor, DWB, and no one is immune. In order to make you more aware of your personal, er, shortcomings, we’ve assembled this handly list of the most common bad habits that occur in the audit room:

• Eating – You either eat food that makes the entire room reek or you happen to simultaneously masticate and opine on recent accounting developments. Trying to burp quietly is an act in futility and don’t react to your food like it’s sexually stimulating (even if it is). All of these make you terrible to be around.


• Personal phone calls – You know that guy that takes three phone calls from his girlfriend every single day at the exact same time? Or you happen to call your mother every day to shoot the breeze for 45 minutes. Oh, that’s you? Well, not only are you shamefully whipped and/or dependent you’re annoying the hell out of everyone else within earshot.

• Humming, whistling and/or singing – For the love of God, why on Earth is necessary to audibly hum a tune that you’re making up in your head? Furthermore, why would you put words to it? You’re an auditor, not Andrew Lloyd Webber. (And no, it’s not OK if the tune is actually one of Mr Lloyd Webber’s compositions – actually that might be worse.)

Now for those of you that simply think that a set of headphones will solve all these problems, we regret to inform you you’re gravely mistaken. Once these habits have saturated a person’s psyche, any movement, otherwise normal, will amplify the inner wrath to deistic proportions.

The above list is by no means all-inclusive and we’ll admit that our tolerance for bad human behavior is lower than most but the issue is important enough to warrant discussion and possible solutions.

It’s Ridiculous to Think That Enterprise Financial Dismissed KPMG Because of the Restatements

KPMG has been kicked to the curb by Enterprise Financial according to an 8-K that was filed on Friday by the company. The ubiquitous claim of “no disagreements with [insert firm]” was there along with a mention of a material weakness that was related to the restatements issued for both 2008 and 2007 but that couldn’t possibly have anything to do with the dismissal of the auditors:

In connection with the identification of the loan participation accounting error described in Item 7, Management Discussion & Analysis and in Item 8, Note 2 of the consolidated financial statements and elsewhere in the Form 10K dated March 16, 2010, the Company also determined that a material weakness in its internal controls over financial reporting existed during the periods affected by the error, including as of December 31, 2008. The Company’s management concluded that the material weakness was the Company’s lack of a formal process to periodically review existing contracts and agreements with continuing accounting significance. To remediate this material weakness, during the fourth quarter of 2009 the Company implemented a formal process to review all contracts and agreements with continuing accounting significance on an annual basis. As a result of the review conducted in the fourth quarter, management did not identify any other errors in its previous accounting for such contracts or agreements. Management believes that this new process has remediated the material weakness in the Company’s internal control over financial reporting.

So in other words, “Yeah, maybe we should have been looking at these contracts but we weren’t and so some material misstatements slid through. We’ve slapped some duct tape on it and it’ll be fine from here on it. End of story.”

The esteemed pleasure of auditing Enterprise now belongs to Deloitte who has now snagged three clients from KPMG this year (by our count) – picking up Jefferies and Select Comfort back in March.

Enterprise Bank parent dismisses KPMG [St. Louis Business Journal]