Mayo latte, anyone?
The auditor’s report
Last Friday was the deadline for submitting comments to the SEC on the PCAOB’s proposed revised auditor’s report. The SEC has never rejected a rule submitted by the PCAOB, so unless the commissioners decide to shred the PCAOB’s independence, auditor’s reports will start looking different next year. This Jason Zweig column in The Wall Street Journal offers an example of the current difference between American and international reports:
The 2016 U.S. annual report for Aegon N.V., the Dutch insurer and asset manager, has a cookie-cutter communiqué of less than 650 words; the international version is more than seven times as long and delves into the potential risks of specific assets and transactions. (Both were prepared by the Amsterdam affiliate of PricewaterhouseCoopers.)
The disclosure of critical audit matters won’t occur until 2019, but the firms more or less know what to expect. They issue expanded reports virtually everywhere else in the world already. Plus, the audit report has been unchanged for decades, putting its value in serious question, despite the fact that its expansion has been decades in the making:
In 1939, the SEC’s chief accountant argued that the auditor’s report should itemize “any permissible exceptions or limitations” in a company’s financial statements, along with any “unusual and significant features of the audit” — exactly in the spirit of the rule the SEC is only now considering.
I’m sure there will be unintended consequences should the proposal get the final stamp of approval. And, as Jim Peterson believes, the firms might turn the spirit of the disclosures into “a box-ticking exercise.” But investors will be getting more information, which is what they want. And more information from audit firms has been a long time coming.
Elsewhere in auditing: Inspectors Again Find Problems in How Broker-Dealers Are Audited, PCAOB Says
Accountants behaving badly
Oh, brother. So many bad decisions here:
A former accountant for Paulding County Schools accused of stealing thousands of dollars was arrested in Florida this week after failing to appear in court, according to jail records.
Julie A. Taylor was charged in August 2015 with theft by conversion after investigators said she took a $25,000 [check] intended for the New Hope Learning Center. Prosecutors said she took the check and used to purchase a boat.
Look, if you’re going to embezzle funds from your employer, 1) Don’t do it by simply taking a check that isn’t made out to you. But also, 2) Don’t use that money to by a boat. If you’ve ignored those two pieces of advice and you’ve been arrested for transgression #1, then please show up for court.
Previously, on Going Concern…
Megan Lewczyk asked if résumés were obsolete.
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