More good stuff for auditors – 9-16-13

A few links and comments of interest to auditors:

• FASB to focus more on improving GAAP than convergadoption with IFRS
• JP Morgan’s huge inventory of problems and increased staffing to deal with compliance
• more on the proposed PCAOB revision to the accountant’s report

Compliance Weekly – FASB Charts New Course as Convergence Wanes – More indication that we might get to bury IFRS convergadoption.  The article says the new FASB chairman, Mr. Russ Golden, is looking for ways that FASB and IASB can work together:

“I envision a long-term global standard-setting environment in which the FASB, the IASB and other major capital market standard setters co-exist and cooperate,”

Perhaps we can call that peaceful coexistence.

The chairman’s comments suggest now the FASB can get back to setting rules in the US (revenue recognition is mentioned), getting more efficient in doing so, and possibly improving the usability of the horribly clumsy ASC.

Sounds to me like a far better use of their time.

Bloomberg – Another Day, Another JPMorgan Investigation – Jonathan Weil reports the what’s-in-this-morning’s-paper investigation of JPM is the Department of Justice looking at whether JPM staff obstructed the investigation by the Federal Energy Regulatory Commission. Fortunately Mr. Weil has a very large notebook he uses to help us keep track of all the investigations.

How does the risk assessment and risk management model go so far wrong as to generate the culture that allows an environment of new-investigation-of-the-day?

What are they doing to end the nonstop start of investigations? Check out:

Wall Street Journal – Embattled J.P. Morgan Bulks Up Oversight – To deal with the flood of legal problems and the underlying compliance issues, JPM will add 3,000 people to their control staff and assign control duties to another 2,000 existing staff. That means they will have 15,000 staff working on legal and regulatory issues out of their 250,000 worldwide staff.

Here’s a survey of their legal troubles:

The bank is operating under four regulatory enforcement actions—more than any other U.S. bank—and it faces at least seven separate investigations by the Justice Department as investigators work through a backlog of probes into banking-industry activities during the housing downturn and financial crisis.

Here is the tone at the top question which is rattling around in my brain:

How do you create an atmosphere where you can make sure 250,000 people obey the law?

Re:The Auditors – Darning Socks: Audit Report Proposal Promises More Holes Down The Road – Francine McKenna discusses the PCAOB’s proposal to require listing critical audit areas in the audit report.  She quotes a number of attorneys involved in suing CPAs. In general, her writing describes quite a mess in the big firms.  I’m not sure what the new report would mean, other than a large increase in the size of the accountant’s report.

I wonder how many of the messes we read about in the audit world could be solved if the plaintiff’s attorney who made the following observation ran out of examples to support his assertion:

Private auditors have demonstrated, repeatedly, that they ignore their public duty provided for in their own ethical rules.

Hmmm. Perform an audit by following the audit and independence rules.