SEC前首席会计师：审计业急需大改, 取消法定审计，公司不应直接付款给审计师......（全文）
SEC前首席会计师：会计师行业急需大改革，取消法定审计，
上市公司不应直接付款给审计师......（全文）
美国证监会前首席会计师 Lynn E. Turnner 近日撰文指出，美国的公共会计师行业需要大改革，包括需要提供质量，透明度，治理水平和问责制。文章不仅指出了美国上市公司审计长期存在的一些问题，诸如审计质量低下，审计师缺乏独立性等等；更重要的是，文章中提出了一系列改革建议，包括：
取消对上市公司法定审计要求，改由上市公司的股东来决定，从法定要求转变为市场决定；
取消由上市公司直接付审计费用给审计师的传统做法， 由PCAOB 先收取审计费， 审计师向PCAOB申请拨款，后者基于审计质量付款；
大型会计公司需要改变大量使用“小朋友“的金字塔人员配置结构，改用律师行业的专业人员配备模式；
获取CPA 资格需要获取会计专业硕士学位......
以下是该文章全文， 中文翻译仅供参考， 英文原文为准
审计行业的改革：提高质量透明度，治理水平和问责制
作者Lynn E. Turner是美国证券交易委员会前总会计师，现为Hemming Morse LLP的高级顾问。
从1933年《证券法》的通过开始，国会要求对美国的所有上市公司进行独立审计。国会对1933年法案进行辩论时，曾讨论过是否由政府雇员进行审核。受美联储，货币审计署（OCC）和联邦存款保险公司（FDIC）监管的银行均由政府雇用的银行审查员进行审查。但是最后，对1933年法案的草案进行了修改，以使审计工作由“独立”的执照会计师（CPA）进行。如今，审计上市公司的注册会计师目前受到证券交易委员会及其总会计师办公室以及上市公司会计监督委员会（PCAOB）的监管。
审计质量低下的持续问题
CPA执行的审核质量仍然存在问题。2008年10月，美国财政部审计专业委员会（ACAP）发布了一份报告，其中对SEC，PCAOB和审计专业提出了许多建议。这个由商业领袖，投资者，前SEC监管机构和CPA组成的委员会在发布该报告之前已经研究了该行业一年。然而，十年后的今天，审计公司或其监管机构几乎没有采取任何建议。结果，看起来四家大型审计公司已经变成“太大而不能倒”。
正如司法部最近对毕马威会计师事务所的审计员采取的行动所强调的那样，许多在SEC或PCAOB监管审计公司的人都加入了这些“四大”公司的监管机构，并重返监管机构。
影响审计行业信誉和信任的持续问题包括：
缺乏独立性—审核员将其审核的公司的管理层视为其“客户”而非将公众视为客户。对审计合伙人而言，保持从年度审计费用中获得的“年金”非常重要。失去大公司的年金会影响合伙人的职业生涯。结果，保持缺乏偏见和专业怀疑的需求直接进入了维持公司年金的需求并与之冲突。
管理层为他们提供了增加收入/利润的商机。
管理层签发付款给他们的支票。
实际上，审计委员会的代表通常是聘请和监督审计师到管理层。管理和审计委员会经常聘用同一名审计员已有数十年甚至几个世纪之久，他们继续支付年金并收到“干净的”审计报告。
审计师已在法庭上宣誓作证，他们没有义务发现重大财务报表舞弊并为公共利益服务。
管理层向独立审计师提供了要审计的会计记录和财务报表（数据）。然后，根据独立审计师的要求，管理层还向审计师提供了支持数字的证据。当审计师谈论在审计中使用“大数据”时，通常是在管理人员创建和维护的数据库中测试数据。因此，审计员检查的数字，证据和支持来自审计对象。令人怀疑的是，管理层将提供不支持其创造的数字的证据。不幸的是，公认审计准则（GAAS）并没有专门解决审计师考虑与公开信息相矛盾的公开信息的需求。再一次，正是这种类型的信息导致分析师和其他外部研究人员发现了财务报表和披露中的错误。正是这些信息使审计师无法在审计中解决。
政府强制管理，公司必须购买审计报告，而不是真正拥有公司的股东来决定。在这方面，对上市公司的审计就像是公共授权的公用事业。
缺乏透明度相对于审计公司绩效和审计质量。没有为投资者提供必要的信息，以告知他们所投资和拥有的公司的财务报表的审计质量和披露情况。在这方面，要求投资者在没有做出知情决定所必需的信息的情况下投票和批准审计师。在审计报告中始终告诉投资者，审计是按照上市公司会计监督委员会（PCAOB）设定的GAAS进行的，这是一种误导性陈述，因为PCAOB发现审计公司在遵守GAAS报告方面存在很大缺陷。
审计事务所独立治理的缺失。对美国乃至全球绝大多数上市公司进行审计的大型审计公司都缺乏有意义的独立治理。上市公司所需要的缺乏治理，导致审计质量和绩效缺乏质量，责任感，透明度和治理。
基于来自全球的检查报告，审计质量很差，这很糟糕，以至于国际独立审计管理者论坛（IFIAR）召集了六家最大公司中的每一个的高级领导来讨论质量低劣的审计。IFIAR的全球审计质量（GAQ）工作组和GPPC网络采取了旨在减少检查结果频率的举措。根据GAQ工作组确定的目标，GPPC网络寻求提高审计绩效，这反映出GPPC网络在四年内的总检查对象所占百分比至少降低了25％至少有一项发现的PIE审核。（请参阅https://www.ifiar.org/）
IFIAR的2016年检查报告指出：“对至少有一个发现的上市公共利益实体（PIE）进行的检查审计发现存在缺陷仍然很高，达到42％。” （请参阅此处。）
审计公司经常指出缺陷率很高，因为监管机构正在选择“高风险”审计，在某些情况下（并非所有情况下），这是正确的。但是，人们会期望审计公司将这些审计分配给他们最好的审计师，因此，缺陷会更少。
最后，即使审计报告知道管理层和公司违反法律法规，也无法向投资者以及审计委员会传达审计员的担忧。收到联邦资金的政府审计员需要提供这种报告，而在近年来这样的情况下，对富国银行等公司的审计则不需要这种报告。
进行改革以建立对作为公司所有者的投资者的问责制，提高透明度和问责制
以下是解决上市公司审计质量差的问题的思路。其中一些想法或建议是十年前美国财政部ACAP提出的。
取消《证券法》中当前的要求，即公司必须接受独立审计师的审计，从而取消了联邦政府的授权。
将其替换为基于市场的要求，即每5年将一份股东建议书纳入年度委托书，询问投资者是否希望由独立审计师对财务报表进行独立审计。因此，应当明确的是，独立审计师为公司所有人（即投资者）的工作并为他们的公共利益服务。我希望投资者通常会投票支持独立审计，除非他们认为进行独立审计没有什么价值。
如果股东确实批准了独立审计的要求（再次，我认为他们几乎总是会这样做）：
审核委员会而非管理层将选择并任命审核员。不能将此责任委托给管理层。
然后将要求股东对审计员进行表决和批准；
然后，将由审核委员会（而非管理层）负责并负责就付给审核员的费用进行谈判；
审计委员会将在审计过程中根据需要向PCAOB提交审计费用帐单。
PCAOB将向每个上市公司收取费用，以支付审计员的审计账单。PCAOB已经建立了从上市公司收取费用的机制
如果PCAOB发现审计师按照SEC规则102（e）的规定从事了不正当的专业行为，或者其内部审计质量控制存在实质性弱点，则PCAOB可能要求公司将其投标书进行投标。或在审计方面存在重大缺陷，即审计师未能遵守PCAOB规定的GAAS。
在任何情况下，审计公司担任上市公司的审计师的时间都不能超过EC今天所允许的20年。
上市公司的所有审计均应要求PCAOB通过的新审计报告。新的审核报告将要求审核员以新的审核报告形式陈述和讨论“关键审核事项”（通常称为CAMS）。新的审计报告还要求审计师声明：“声明PCAOB标准要求审计师计划并执行审计，以合理保证财务报表是否不存在由于错误或欺诈引起的重大错报。”
但是，PCAOB豁免了广泛的公共实体，并且不需要沟通关键的审计事项，即可根据1934年的《证券交易法》（“《交易法》”）对新兴增长公司（“ EGC”），经纪人和交易商进行审计细则17a-5；商业开发公司以外的投资公司（例如共同基金）；以及员工的股票购买，储蓄和类似计划（“福利计划”）。
如果审计师在进行审计工作时发现公司或管理层违反法律或法规，可能对公司的财务报表或经营产生重大影响，则应要求他们在报告中予以披露，就像必须遵守GAO黄皮书审核标准的政府机构审核员。
在2000年8月，由PW前主席主持的审核有效性小组（O'Malley小组）建议，每次审核都应包括法证部分。应该再次考虑该建议，包括在GAAS中确定审计师是否需要考虑与证据管理所提供的信息相矛盾的公开信息。
要求披露每次审计的审计质量指标，并向公司的投资者提供审计意见。这些指标应在公司的委托书中披露，作为公司审计委员会向投资者报告的一部分。还应要求审计委员会在委托书或《章程》中披露委员会定期进行审计的程序。实际上，如果审计公司正在管理审计质量，则它们应该已经在评估各个审计的审计质量。但是来自全球的审计检查结果提供了一些尚未发生的证据。
提高PCAOB的透明度。PCAOB每年检查很少一部分公开上市公司的审计，并为每家公司提供其发现的公开检查报告。对于那些接受检查的审核，PCAOB检查报告也许是当今审核质量的最佳指标。但是PCAOB拒绝提供被审计公司的名称，并指出2002年的《萨班斯-奥克斯利法案》（SOX）禁止这样做。但这是错误的，因为SOX中没有语言禁止披露接受检查的公司的名称。SOX禁止的是披露PCAOB针对不良审核所采取的调查和执行措施。萨班斯参议员同意修订当时的SOX草案（2002年5月），其中包括禁止公开披露信息，直到PCAOB强制执行行动最终完成时，应审计公司和代表他们进行谈判的Enzi参议员的要求。哈维·戈德施密德（Harvey Goldschmid）（不久后将成为美国证券交易委员会专员）和我恳请参议员不要做出这一改变，因为美国证券交易委员会（SEC）采取的执法行动不是私人的，而是实际上是公开的。参议员杰克·里德（D-罗德岛州和格拉斯利（爱荷华州））引入了后来引入的立法，该法案在PCAOB的支持下过去是为了扭转这种变化并公开行动。不幸的是，与此同时，审计事务所使用SOX的这种隐藏，上诉和推迟行动的规定直到很多年过去了，然后，审计公司总是发表公开声明，从本质上说，PCAOB的最终行动已经存在多年了，应该忽略不计。应审计事务所和代表他们进行谈判的恩兹参议员的要求。哈维·戈德施密德（Harvey Goldschmid）（不久后将成为美国证券交易委员会专员）和我恳请参议员不要做出这一改变，因为美国证券交易委员会（SEC）采取的执法行动不是私人的，而是实际上是公开的。参议员杰克·里德（D-罗德岛州和格拉斯利（爱荷华州））引入了后来引入的立法，该法案在PCAOB的支持下过去是为了扭转这种变化并公开行动。不幸的是，与此同时，审计事务所使用SOX的这种隐藏，上诉和推迟行动的规定直到很多年过去了，然后，审计公司总是发表公开声明，从本质上说，PCAOB的最终行动已经存在多年了，应该忽略不计。应审计事务所和代表他们进行谈判的恩兹参议员的要求。哈维·戈德施密德（Harvey Goldschmid）（不久后将成为美国证券交易委员会专员）和我恳请参议员不要做出这一改变，因为美国证券交易委员会（SEC）采取的执法行动不是私人的，而是实际上是公开的。参议员杰克·里德（D-罗德岛州和格拉斯利（爱荷华州））引入了后来引入的立法，该法案在PCAOB的支持下过去是为了扭转这种变化并公开行动。不幸的是，与此同时，审计事务所使用SOX的这种隐藏，上诉和推迟行动的规定直到很多年过去了，然后，审计公司总是发表公开声明，从本质上说，PCAOB的最终行动已经存在多年了，应该忽略不计。
目前，法律规定，在不超过五年后，项目牵头（负责）审计合伙人必须轮换。这是根据国会记录为审核提供“新的眼光”。但是，可以有许多审计合伙人参与审计，而且发现牵头合伙人轮换是不常见的，而过去一直在进行审计的人又轮换担任牵头审计合伙人的职位。结果，激励合作伙伴不要提出过去的新问题。鉴于上述引用的改革，可以免除这项与之相关的大量成本的要求。
要求上市公司的每位审计师都必须发布年度报告，就像他们需要进行审计的公司一样，其中必须包含：
根据公认会计准则（GAAP）编制的财务报表。这对于评估这些公司的财务状况非常重要，因为执法机构和监管机构的行动已证明这些公司“太大而不能倒闭”。
讨论公司关于审计各个方面的质量控制，包括独立性，人力资源（如雇用，培训和监督），审计绩效，选择和保留所审计的公司以及测试和实施质量控制。
与个人审计工作不同，在整个公司范围内讨论审计质量指标。
讨论公司的治理结构，过程和程序。
欧盟委员会已经要求每个大型审计公司提供一份包含这些信息的报告。美国审计公司确实会自行发布年度报告，但它披露的财务信息非常有限，而有关治理结构，高管人员的责任以及绩效衡量和改进的信息也非常有限。
对超过100家上市公司进行审计的审计公司应被要求在公司董事会中具有独立董事或成员。
审计事务所需要放弃他们今天用于人员配置的“金字塔”方案，并采用律师事务所中使用的超专业模型。金字塔结构导致了才华横溢，但年轻且经验不足的员工被指派执行审计程序，而员工在业务交易方面则准备不足以进行检查和挑战。
应要求所有CPA都具有会计学硕士学位。我相信急需专业会计课程的硕士。大型审计事务所鼓励学生离校并在其获得硕士学位之前开始其职业的行为令人失望，因为这突出表明了这些事务所缺乏对教育的承诺。行动胜于雄辩。
SEC应修改其对审计委员会财务专家的定义，并采纳其初步建议。美国证券交易委员会（SEC）应澄清审计委员会，不得将此责任委托给公司管理层，今天通常这样做。
Reforms of the Auditing Profession: Improving Quality Transparency, Governance and Accountability
Beginning with the passage of the 1933 Securities Act, Congress has required an Independent Audit for every public listed company in the United States. At the time the 1933 Act was debated by Congress, it was discussed as to whether to have audits performed by employees of the government. Banks regulated by the Federal Reserve, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) are all examined by government employed banking examiners. But in the end, the draft of the 1933 Act was modified to have the audits performed by a licensed accountant (CPA) who is “independent.” Today CPA’s who audit publicly listed companies are currently regulated by both the Securities and Exchange Commission and its Office of the Chief Accountant, and the Public Company Accounting Oversight Board (PCAOB).
Continuing Issues with Poor Audit Quality
There continue to be issues with the quality of audits performed by CPA’s. In October, 2008, a U.S. Treasury Committee on the Auditing Profession (ACAP) issued a report with many recommendations for the SEC, PCAOB, and auditing profession. This committee of business leaders, investors, former SEC regulators, and CPA’s studied the profession for a year before issuing its report. Yet today, ten years later, few of the recommendations have been acted upon by the audit firms, or their regulators. As a result, it appears the four large audit firms have become “two big to fail.” And many of those who are regulating the audit firms at the SEC or PCAOB have joined the regulators from these “Big 4” firms, and have returned to them, as highlighted in the recent action of the Department of Justice against auditors at KPMG.
Continuing issues affecting the credibility and trust in the auditing profession includes:
Lack of Independence—Auditors view management of companies they audit as their “client” not the public. It is important to audit partners that they maintain the “annuity” received from the annual audit fees. Losing an annuity from a large company can impact a partner’s career. As a result, the need to maintain a lack of bias and professional scepticism runs head on into, and conflicts with, the need to maintain the annuity for the firm.
Management provides them business opportunities to grow their revenues/profits.
Management writes their check.
Too often, in reality, audit committee’s delegate hiring and oversight of the auditor to management. Management and Audit Committees have often retained the same auditor for decades, even centuries, continuing to pay the annuity, and receiving “clean” audit reports.
Auditors have testified under oath in court, that they do not have an obligation to detect material financial statement fraud and serve the public interest.
Management provides the independent auditor with the accounting records and financial statements (numbers) to be audited. Then upon request from the independent auditor, management also provides the auditor with the evidence to support the numbers. When auditors talk of using “Big Data” in an audit, it too often is testing data in a data base created and maintained by management. As such, the numbers, and evidence and support the auditor examines, comes from the party that is the subject of the audit. It is doubtful that management is going to provide evidence that does not support the numbers they have created. Unfortunately, Generally Accepted Auditing Standards (GAAS) do not specifically address the need for the auditor to consider publicly available information that contradicts the information management has provided. And time and time again, it is this type of information that has resulted in analysts and other outside researchers bringing to light errors in financial statements and disclosures. And it is this information that auditors have failed to address in their audits.
The government mandates management and the company MUST buy audits, rather than those who actually own the company. In this respect, auditing of publicly listed companies is like a publicly mandated utility.
Lack of Transparency with respect to Audit Firm Performance and Audit Quality. Investors are not provided information necessary to inform them as to the quality of the audit of the financial statements and disclosures of the company they invest in and own. In that regard, investors are being asked to vote and ratify the auditor without information necessary to making an informed decision. Investors are consistently told in the audit report that audits have been done in compliance with GAAS set by the Public Company Accounting Oversight Board (PCAOB), a misleading statement in light of the very high deficiencies in compliance with GAAS reporting by the PCAOB and other audit regulators around the globe.
Lack of Independent Governance of Audit Firms. The large audit firms, which audit the vast majority of publicly listed companies in the US as well as around the globe, all lack meaningful independent governance. This lack of governance, which is required for publicly listed companies, has resulted in a lack of quality, accountability, transparency, and governance when it comes to audit quality and performance.
Very poor audits quality based on inspection reports from around the globe—so bad that the International Forum of Independent Audit Regulators (IFIAR) called senior leadership from each of the six largest firms in to discuss the poor audit quality. IFIAR’s Global Audit Quality (GAQ) Working Group and the GPPC networks undertook an initiative aimed to reduce the frequency of inspection findings. In accordance with a target established by the GAQ Working Group, the GPPC networks seek to improve audit performance, reflected in a decrease of at least 25%, on an aggregate basis across the GPPC networks over four years, in the percentage of their inspected listed PIE audits that have at least one finding. (See https://www.ifiar.org/)
The 2016 Inspection report of IFIAR stated: “Inspected audits of listed public interest entities (PIEs) with at least one finding remained unacceptably high at 42%.” (See here.)
Audit firms often state the deficiency rates are high because the regulators are picking “High Risk” audits which in some, but not all instances, is true. However, one would expect the audit firms to assign these audits to their very best auditors, and as a result, there would be fewer deficiencies.
And finally, audit reports have failed to convey to investors—as well as audit committees—concerns of the auditor, even when they know management and companies are violating laws and regulations. Such reports are required for auditors of governments that receive federal funds, but are not required in instances such as seen in recent years, for audits of companies such as Wells Fargo.
Reforms to establish accountability to investors as owners of the company, enhance transparency and accountability
Below are ideas to address the issues with poor audit quality on audits of publicly listed companies. Some of these ideas or recommendations were put forward ten years ago by the U.S. Treasury ACAP.
Remove the current requirement in the Securities Laws that a Company must have an audit by an independent auditor, thereby eliminating the federal government mandate.
Replace it with a market based requirement, that every 5 years, a shareholder proposal be included in the annual proxy, asking if the investors want an independent audit of the financial statements by the independent auditors. Accordingly, it would be made clear that independent auditors work for, and serve the public interest of the owners of the company—the investors. I would expect that investors most often would vote for an independent audit, unless they saw little value in having one.
If the stockholders do approve the independent audit requirement (and again, I think they almost always would):
The audit committee, not management, would select and nominate the auditor. This responsibility could not be delegated to management;
The stockholders would then be asked to vote on and approve the auditor;
The audit committee, not management, would then be tasked with and responsible for negotiating the fee to be paid to the auditor;
The audit committee would submit a bill for the audit fee to the PCAOB as necessary during the course of the audit.
The PCAOB would collect a fee from each public company to cover the bill of the auditor for the audit. The PCAOB already has a mechanism in place for collecting fees it is required to get from public companies
The PCAOB could require a company to tender their audit for proposal, if the PCAOB found the auditors had engaged in improper professional conduct as defined in SEC Rule 102(e), or had a material weakness in their own internal audit quality controls; or had significant deficiencies on an audit in which the auditor had failed to comply with GAAS as set by the PCAOB.
In no event, could the audit firm serve as auditor for a publicly listed company for a period longer than what is permitted today by the EC which is 20 years.
The new auditor report adopted by the PCAOB should be required on all audits of public companies. This new audit report will require the auditor to state and discuss in this new form of audit report, “critical audit matters” (commonly referred to as CAMS). The new audit report also requires the auditor to state: “A statement that PCAOB standards require that the auditor plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.”
However, the PCAOB exempted a wide swath of public entities and did not require communication of critical audit matters for audits of emerging growth companies (“EGCs”), brokers and dealers reporting under the Securities Exchange Act of 1934 (the “Exchange Act”) Rule 17a-5; investment companies (e.g., mutual funds), other than business development companies; and employee stock purchase, savings, and similar plans (“benefit plans”).
If auditors through their audit work, become aware of a company or management breaking a law or regulation, that could have a material impact on the financial statements or operations of a company, they should be required to disclose it in their report, just as an auditor of a governmental agency subject to the GAO Yellow Book auditing standards is required to do so.
In August, 2000, The Panel on Audit Effectiveness (O’Malley Panel) chaired by the former Chairman of PW recommended that each audit include a forensic segment of the audit. Consideration should once again be given to this recommendation including establishing within GAAS, the need for auditors to consider publicly available information that contradicts the evidence management has provided them.
Require disclosure of audit quality indicators for each auditon which an opinion of the auditor is provided to investors in the company. These indicators should be disclosed in the Company’s proxy as part of the Company’s audit committee report to investors. Audit committees should also be required to disclose either in the proxy, or in the Charter of the Committee, the committees procedure for periodically tendering the audit. Audit firms should already be measuring audit quality on individual audits if in fact they are managing audit quality. But the audit inspection results from around the globe provide some evidence, that has not be occurring.
Improving the transparency of the PCAOB. The PCAOB inspects a very small percentage of the audits of publicly listed companies each year, and provide a public inspection report for each firm with their findings. For those audits inspected, the PCAOB inspection reports are perhaps the best indicator of audit quality today. Yet the PCAOB has refused to provide the name of companies being audited, stating the Sarbanes-Oxley Act of 2002 (SOX) prohibits this. But that is false as there is not language in SOX that prohibits the disclosure of the name of the companies whose audits are inspected. What SOX does prohibit is disclosure of investigations and enforcement actions taken by the PCAOB with respect to a poor audit. Senator Sarbanes agreed to an amendment of the then draft of SOX (May 2002), to include a prohibition on public disclosure, until the PCAOB enforcement action is final, at the request of the audit firms and Senator Enzi who was negotiating on their behalf. Harvey Goldschmid, who would shortly thereafter become an SEC Commissioner, and I, pleaded with the Senator not to make this change, as enforcement actions taken by the SEC are not private, but are in fact public. Senator Jack Reed (D-Rhode Island and Grassley (R-Iowa) have introduced subsequently introduced legislation, supported by the PCAOB in the past, to reverse this change and make the actions public. Unfortunately, in the meantime, the audit firms have used this provision of SOX to hide and appeal and delay the actions until many years have gone by. Then the audit firm always makes a public statement that in essence says a final PCAOB action is years old and should be ignored.
Currently the law requires that an audit partner be rotated off as the lead audit partner for a company, after no longer than five years. This is to provide a “fresh set” of eyes to the audit according to the congressional record. Yet there can be a number of audit partners on an audit, and it is not uncommon, to find the lead partner rotated off, and one who has been on the audit in the past, rotated into the lead audit partner position. As a result, there are incentives for partners not to bring up new problems from the past. Given the reforms cited above, this requirement, which has significant costs associated with it, could be eliminated.
Require each auditor of public companies to issue an annual report, just as the companies they are required to audit must, containing its:
Financial statements prepared in accordance with generally accepting accounting principles (GAAP). This is important to assessing the financial health of these firms as they have become “too big to fail” as demonstrated by actions of law enforcement agencies and regulators.
A discussion of the firms quality controls regarding all aspects of the audit including independence, human resources such as hiring, training and supervision, performance of audits, selection and retention of companies they audit, and testing and enforcement of the quality controls.
A discussion of the firm wide, as opposed to individual audit engagement, audit quality indicators.
A discussion of the firm’s governance structure, process and procedures.
The European Commission already requires each of the large audit firms to provide a report with some of this information. The US audit firms do publish an annual report on their own, but it discloses very limited financial information, and limited information on governing structures, accountability of executives, and performance measurement and improvement.
Audit firms that audit more than 100 public companies should be required to have independent directors or members on the firm’s governing board.
Audit firms need to abandon the “Pyramid”scheme they use for staffing today, and adopt a paraprofessional model used in law firms. The pyramid structure has resulted in talented, but young and inexperienced staff assigned to perform audit procedures, with respect to business transactions the staff are ill prepared to examine and challenge.
All CPA’s should be required to have a master’s degree in accountancy. I believe the master of professional accountancy program is sorely needed. The actions of the large audit firms in which they encourage students to leave school and begin their careers before the student receives their master is disappointing in that it Highlights the lack of commitment to education by those firms. Actions speak louder than words.
The SEC should revise its definition of what is a financial expert on the audit committee and adopt its initial proposal. The SEC should clarify the audit committee MAY NOT delegate this responsibility to the management of the Company, which is often done today.