Posts Tagged ‘audit failure’
Seriously, if you are providing audit, review, or compilation services to your clients, you really need to be in the peer review program. And you really, really need to be doing fairly good work. I doubt any CPAs in California who desperately need to read this post will be doing so, but it is still worth mentioning.
The California Board of Accountancy is coming down hard on CPAs who have avoided the peer review program. Seriously missing the boat on audit quality is getting hammered as well.
The Spring/Summer 2016 edition of the quarterly Update newsletter from CBA, issue 81, has several reports of firms drawing serious sanctions. There are 21 pages of narrative describing the sanctions through April 24, 2016. Of 28 disciplinary issues, 7 deal with peer review, which are the ones I will highlight.
If I got it straight, the international consortium of Grant Thornton is writing the check to settle up for the fiasco on the Parmalat audit.
You may vaguely recall that mess. In two sentences, Parmalat had a fake bank account in the Cayman Islands that supposedly held €3.95B (yes, four billion Euros, that’s 4,000,000,000) which was around half of the consolidated balance sheet of about €8B as of 12/31/03. The auditors in the Italian affiliate (if I recall correctly) of GT sent a confirm to the address the client gave them for the bank in the Caymans which was, of course, intercepted, signed by company staff, and returned to the auditor.
The scheme fell apart and has been rattling around in the legal system for just over a decade, in and out of the US and bouncing between circuits when here.
For some reason, my article two years ago describing A Halloween costume that would make any CPA pass out from fright – an auditor performing one pension plan audit, has been getting extra visits this week.
Check out the post above. It will be funny for accountants.
The joke is based on how frightening the idea is for an auditor to perform one or two pension audits. The risk is astronomical of doing something seriously wrong. Just as frightening is the idea of an accountant only doing one or two audits.
Yesterday, at the Accounting and Auditing Conference presented by CalCPA, I heard the statistics that made the Department of Labor so upset.
Gotta’ love the drawing of a seated Doberman with a wondering look on his face as he stares at a trail of muddy feline paw prints. Staring around helpless are three other dogs. The befuddled watchdog has a tag labeled “PwC” in case you hadn’t yet caught the point.
The previous drawing was of an overfed cat in a three-piece suit helping himself to a bag of cash from a safe as four dogs snoozed in front of the safe. Said dogs have a tag identifying each as a member of the Big 4.
If you are an auditor, you really should get a fresh cup of coffee and check out The Economist’s discussion of The dozy watchdogs. Will let you see what non-accountants think of the profession (not too much) and the job the big firms are doing (not so great).
Yeah, there is a problem
9/8 – re:The Auditors – More on My Reuters Breakingviews Column: The Andersen Tax Name Grab – Francine McKenna brings in more background and other articles on the return of the Andersen brand.
She even quotes the last part of my previous post which said that if a small portion of the worldwide CFOs think the Andersen name denotes quality then there is huge market for the formerly named WTAS firm.
Why does PCAOB definition of ‘audit failure’ overstate audit failures? Perhaps because saying ‘audits that should have done better which we found after intentionally looking for audits that might have deficiencies’ doesn’t sound as severe.
The PCAOB’s self-created definition of audit failures overstates the severity of issues found during inspection, according to a board member of the PCAOB.
Journal of Accountancy reports on 3/21 a PCAOB member suggesting Stop using “audit failure” term in PCAOB reports, Hanson says.
Mr. Jay Hanson says the definition used by the PCAOB is causing confusion about the severity of issues identified during inspections. Here’s the range of definitions of that phrase:
Casual description of PCAOB usage, according to the article:
Sometimes it’s weird reading a story about the Civil War. It’s the same when reading about an audit fiasco.
People do the oddest things.
As the first major battle of the war shaped up near Manassas Junction, lots of people rode out from DC in their carriages. They brought along picnic baskets so they could eat as they watched the battle. Would be a fun afternoon outing with the children.