November 20, 2018

Audit

kpmg china medical

KPMG U.K. Is Giving Up Non-Audit Work on FTSE 350 Clients. Will the Other Big 4 Firms Follow?

So, Sky News broke some pretty big news in the United Kingdom earlier this morning regarding the House of Klynveld: KPMG is to cease undertaking non-audit work for the FTSE-350 companies whose accounts it supervises, becoming the first of the ‘big four’ firms to make such a pledge in the aftermath of scandals surrounding the […]

Holding out money

Hiring Executives with Audit Experience and Paying Them Well is Stupid, Says Research

Since the dawn of time, or at least since the dawn of the green eyeshade, corporations have looked to fill the C-suite with financially literate hires. And who, I ask, is more financially literate than a former accounting professional? Well, other than whoever is in charge of laundering drug money for the Sinaloa cartel, probably […]

Pair of asses

Deloitte Mexico Auditors Attempt to Phone in Sloppy Audit Work, Fail

The PCAOB has barred, fined, and censured three Deloitte Mexico audit partners for their role in the absolute bamboozle of an audit on Prestaciones Finmart, a Mexican subsidiary of Texas-based EZCORP, Inc. Finmart accounted in FY 2013 and FY 2014 for approximately 21% and 26% of EZCORP’s consolidated assets and approximately 23% and 42% of […]

Former Big 4 Audit Intern Pens Heartbreaking Tribute to Friend Who Died From ‘Overworking’

We’ve been heavy on the death and depression around these parts lately, and for that I’m sorry. I guess it’s just the nature of the game sometimes. I’m not that sorry, though, because we’re about to talk about completely preventable death some more. A Facebook post from a former Big 4 intern went viral recently […]

woman typing

Report: Big 4 Audits Are Rarely Led By Women

On this, the most sacred of #AuditorProud days, we thought we’d tackle the recent CFA Institute report [PDF] that shows women are woefully underrepresented as lead engagement partners. This data is available thanks to AuditorSearch and a hard-fought battle over the years to require partner naming on audit reports. Thankfully, that tattooing the client’s name […]

FRC Didn’t Want Grant Thornton U.K. to Feel Left Out of All the Disciplinary Fun

The Big 4 firms in the U.K. have been the target of repeated tongue-lashings from the Financial Reporting Council lately because, let’s face it, audits have been pretty damn bad. Things have gotten so desperate that EY is bringing in behavioral psychologists to improve audit quality. But the U.K. accounting watchdog’s most recent tongue-lashing wasn’t […]

Broker-Dealer Audits Are Still Sloppy, But Hey, Auditor Independence Violations Are Down, So That’s Something

The Public Company Accounting Oversight Board released its report on 2017 inspections of broker-dealer audits on Aug. 20, and once again, there was some disappointing news for those who champion audit quality. According to a PCAOB press release: In this inspection period, the PCAOB inspected 75 audit firms and reviewed portions of 116 audits and […]

Stop Me If You’ve Heard This One Before: FRC Reprimands KPMG U.K. for Crappy Audit

When it comes to the Financial Reporting Council and KPMG audits, it must be like shooting fish in a barrel. This time, the U.K. accounting watchdog fined KPMG £2.1 million ($2.7 million) on Aug. 20 following the Big 4 firm’s admission of misconduct on the audit of fashion company Ted Baker Plc’s financial statements in […]

Government Auditors Say the Institute of Internal Auditors Is Making a ‘Big Mistake’ By Phasing Out the CGAP Credential

The Certified Government Auditing Professional (CGAP) is one of three specialty certifications that are being phased out by the Institute of Internal Auditors (IIA)—and several government auditors who hold the CGAP aren’t very happy about it. “I’m disappointed but not surprised by the IIA’s short-sighted decision to phase out new applications to the CGAP,” Chris […]

PwC fdic colonial

U.K. Watchdog Blasts PwC for ‘Incomplete, Inaccurate, and Misleading’ Audit of BHS

In a leaked Financial Reporting Council report, the U.K’s accounting watchdog hammered PwC for bungling the audit of BHS, which resulted in “incomplete, inaccurate, and misleading” statements being made about the now-defunct retailer’s financial situation just before it was sold for £1, according to Accountancy Age. The article states: According to the leaked report, which […]

Judge Allows Class-Action Suit to Proceed Against KPMG Over Shoddy Miller Energy Audit

A federal judge in Tennessee on Aug. 2 declined to throw out a securities class-action lawsuit against KPMG, in which investors are accusing the Big 4 firm of screwing up the audit of now-defunct oil and gas company Miller Energy Resources Inc. In Lewis Cosby et al. v. KPMG L.L.P., the investors say they got […]

Deloitte Gobbled Up the Most New SEC Audit Clients in Q2; EY and KPMG Threw Up a Bunch of Clients

After two Utah-based firms you might not have ever heard of picked up the most new Securities and Exchange Commission audit clients in the first quarter of 2018, Deloitte was the big winner in the second quarter, snagging 15 new engagements, with a net of 13, according to Accounting Today. BDO USA was the runner-up […]

dog fails to catch ball

Audit Leaders Verbally Reaffirm Commitment to Audit Quality Since We Couldn’t Tell From Crappy Audits Lately

Last week, seven hotshots in the world of accounting and auditing stepped up and put their name on a statement “reaffirming” the profession’s commitment to audit quality. As my headline so subtly suggests, it’s a good thing someone said something because honestly it’s kinda hard to tell they’re serious given all the audit scandals, PCAOB […]

Setback in Court For Ex-KPMG Execs, As Judge Refuses to Toss Out Counts in PCAOB Inspection Info Leak Case

As Mick Jagger sings, “You can’t always get what you want.” What three former top KPMG executives and two former employees of the Public Company Accounting Oversight Board—who are accused of participating in a scheme in which confidential PCAOB inspection information was shared with the accounting firm—wanted was for their conspiracy and wire fraud counts […]

Changing the Big Audit Model: Where Might the Regulators Go?

In the Federal Deposit Insurance Corp.’s litigation against PwC over its audits of the failed Colonial Bank in Alabama, Judge Barbara Rothstein has loosed a second blast—her decision of July 2 fixed damages at $625 million for the liability spelled out at length in her decision last December. Appeals will come, making premature any crystal […]

KPMG U.K. Chairman Taking Heat for Defending Carillion Audit

An article published today by The Times in which KPMG U.K. Chairman Bill Michael defended the firm’s audit of Carillion is getting some reaction on Twitter—good for the newspaper, bad for Michael and KPMG. The article states: The chairman of KPMG has hit back at MPs in charge of the inquiry into the collapse of […]

Slim Pickings For SIG, as It Settles on EY as New Auditor

While the U.K.’s Financial Reporting Council investigates Deloitte’s 2015 and 2016 audits of SIG, the building products distributor has selected EY as its new auditor, according to the Financial Times. EY was the only Big 4 firm eligible to bid for the SIG contract, which according to The Times newspaper, is worth about £1.6 million […]

Does the ‘P’ in KPMG Stand For ‘Probes?’

Because we have two new probes into KPMG to tell you about. First, two weeks after the quality of its audit work was called “unacceptable” by the Financial Reporting Council, KPMG is being probed by the United Kingdom’s accounting watchdog over its audit of British beverage wholesaler Conviviality’s financial statements, according to the Financial Times. […]

Colonial Bank Collapse Will Cost PwC $625 Million, Reports Say

[Updated with statement from Bartlit Beck Herman Palenchar & Scott] Reports are hitting the interwebs this afternoon that a federal judge has ordered PwC to pay the Federal Deposit Insurance Corp. $625 million in damages for failing to uncover a long-running fraud scheme between its client Colonial Bank and the now-defunct mortgage lender Taylor, Bean & […]

Deloitte’s Audits of SIG Under U.K. Regulator’s Microscope

The Financial Reporting Council, the U.K.’s audit watchdog, is calling, is calling, is calling out Deloitte’s name in a probe of the Green Dots’ 2015 and 2016 audits of building products distributor SIG, according to several publications across the pond. From the Financial Times: SIG said in February it had discovered misstatements after a whistleblowing […]

KPMG Used Confidential Inspection Info to Snatch BBVA Away From Rivals, Report Says

If you missed this late last week, Francine McKenna of MarketWatch detailed how KPMG used access to confidential Public Company Accounting Oversight Board inspection information to poach a client from its Big 4 rivals. The client, Spanish bank BBVA, was one of nearly a dozen KPMG clients caught up in the audit inspection scandal. Others […]

Report: Court Documents Name KPMG Audit Clients Caught Up in PCAOB Leak Fiasco

MarketWatch reporter and friend of Going Concern’s, Francine McKenna, wrote an outstanding article today after digging through court documents obtained by MarketWatch that name the audit clients caught up in the KPMG audit inspection conspiracy. And there are some pretty big names. The Justice Department in January brought criminal charges against five former KPMG executives […]

Squar Milner

What Next For the Big 4 in the U.K.? London Is Searching

A drunk, searching on hands and knees under a street lamp, tells the inquiring police, “I’ve lost my keys – over there in the dark alley.” “Then why look here?” they ask, perplexed. “Because the light’s better here.” In the city of London, where the modern audit profession was born in the Victorian era, no […]

U.K. Accounting Regulator Chides KPMG For ‘Unacceptable’ Decline in Audit Quality

And here I thought Phil Mickelson’s meltdown on the 13th green at the U.S. Open on June 16 would be the worst thing to happen to KPMG this week. From Bloomberg: KPMG’s audit work in the U.K. is of an unacceptable standard, Britain’s accounting regulator said, fueling calls to reform the industry, including dismantling the […]

internal audit jobs

Everything You Wanted to Know About Internal Audit (But Were Afraid to Ask)

If you’d asked me for the definition of internal audit a few months ago, I would have guessed it was some sort of self-help cleansing ritual involving crystals and quinoa. You know, the type of exercise where afterward you annoy all your friends by telling them how mindful and present you are now. And they […]

audit dod department of defense

Ready or Not: Auditors Descend on Department of Defense

It’s not as cool as a multi-ship C-17 formation dropping paratroopers as a part of a training exercise (like the one that everyone thought was a UFO on Saturday night). But, our profession’s only semi-equivalent — 2,400 red-pen wielding auditors — will infiltrate the Department of Defense (DoD) this month to kick butt and take […]

big-4-punishment

U.K. Audit Regulator Encouraged to Slap Big 4 Wrists Slightly Harder

Despite what you might hear, Big 4 audit firms have it pretty easy when it comes to compliance. Yes, there a ton of rules to follow, but in the event that a firm, one (or several) of its partners and employees run afoul of those rules, the consequences range from a mild rebuke to a […]

accountants auditors data analytics resize

Watering Down Data Analytics for Dumb Accountants

Most accountants, especially CPAs, seem smart on paper. Some even live up to it in person. Others are less, um, fortunate… So, it doesn’t come as a big surprise that even our profession’s own publication called us out for being dumb, or at least naïve when it comes to data analytics: Accountants need to increase […]

accounting news kpmg liberty tax

KPMG Settles With SEC Over a Giant Failure of an Audit

KPMG has settled SEC charges for $6.2 million due to a shoddy audit of an oil and gas company. The partner in charge of the job, John Riordan, also settled to charges, agreeing to a $25,000 fine and a suspension to practice before the SEC. He can re-apply in two years. KPMG did not admit […]

sarbanes-oxley-accountants-whistleblowers-

Sarbanes-Oxley 15 Years Later: Accountants Need to Speak Up Now More Than Ever

This Sunday, July 30, 2017, marks the 15th anniversary of the enactment of the Sarbanes-Oxley Act (“SOX”) of 2002. SOX emerged after the “smartest guys in the room” caused Enron to implode, and WorldCom magically erased billions in earnings overnight. The scandals shook the public’s confidence in the reliability of financial reporting and led to […]

Big 4 Auditors Are Probably Looking Forward to More Amiable PCAOB

Michael Rapoport reports in the Wall Street Journal on the waning James Doty era at the PCAOB and that he will probably exit with unfinished business: Mr. Doty, chairman of the Public Company Accounting Oversight Board, may only have months left to pursue his wish list, including a change that would require auditors to tell […]

PCAOB Inspectors Find IT Auditors on the Struggle Bus

In case you missed the news earlier this month, all of the PCAOB reports are out for the Big 4's 2015 cycle of inspections. What schadenfreude awaits us? Let’s take a look. Big picture — regarding overall deficiency rate — PwC is the winner this year. Even if PwC is only slightly ahead, the firm […]

Deloitte’s Brazil Firm Covered Up a Couple of Bad Audits

The big news in the international audit firm world today is an announcement by the PCAOB that Deloitte’s Brazil firm audited badly and then covered up that bad auditing, which is also bad. The whole thing involved a dozen auditors including the Brazil firm’s former Audit Practice Leader, former Risk and Reputation Leader and former […]

Good Enough for Government Accounting: Junk Shop Treasure and Two (Allegedly) Crooked Auditors

First the good news (treasure discovered!) and then the bad news (some auditor generals are allegedly corrupt.) Arkansas' first auditor kept a journal Whenever I'm sifting through junk at Salvation Army, I dream of finding a treasure that'll A) land me a coveted spot on Antiques Roadshow and B) fetch me a small fortune at […]

PwC Is in the Midst of a Independence Quagmire

Independence: its complicated. Except it isn’t, really. Audits firms are conflicted because they’re paid by the organizations who they’re supposed to be independent of audit clients. Most people, I think, know this yet choose to ignore it. Fine.

The Future Audit Team: Smaller, Nerdier, Expensiver

As auditing changes, naturally, so will the auditors. Technology drives a lot of this change so it stands to reason that people who understand and build technology will become the new auditors. Or, maybe accounting programs will become more technology focused. Either way, recruiting auditors will look very different and sooner than you might think. […]

Partner Names: Coming to an Audit Near You in 2017

After nearly seven years since the first concept release, the SEC approved the PCAOB's rules for disclosing the names of audit engagement partners and other participating firms. You can read the entire SEC order if you find the securities regulation apparatus fascinating. Personally, I think it's interesting that another round of comments is allowed prior […]

PCAOB: Just Stop Altering Audit Workpapers Already

Are you an auditor? Do you have any public company clients? Have you recently been notified that the PCAOB will be inspecing the audit of one of those public company clients? Are you now just remembering that you may have left something out of the audit documentation that would definitely get you in trouble with […]

Audit Firm Violates Independence Spectacularly

Has it been awhile since we've discussed an egregious independence violation committed by an audit firm? Yes, I think it has. The drought ends with this PCAOB disciplinary order in the matter of Moss, Krusick & Associates ("MKA") and Joseph M. Krusick, CPA. Krusick was the engagement partner on Credit One Financial, Inc. a company […]

Don’t Let the Completeness and Accuracy of System-Generated Reports Be a ‘Leap of Faith’

I have noticed, much to my chagrin, a lot of CPAs don’t take learning about accounting information systems very seriously. In college, so many students write it off because “it’s not relevant” and, you know, that belief is only true if you end up working in a large firm and have the luxury of passing […]

Government Audits Turn Up Some Scary Stuff

In 2016, government auditors in Washington state discovered $420,300 in unemployment benefits paid out to prisoners. Prisoners, by the way, are ineligible for unemployment benefits. It feels like an episode of Orange is the New Black (another quality show I've been binge-watching in my spare time), but as far as I know, it's still just […]

What Auditors Ought to Know About the Internet of Things

Whenever I think about the Internet of Things ("IoT"), my mind jumps to a Disney original movie from 1999 called Smart House. If you haven’t seen it (no real surprise), here’s a clip. Fast forward less than two decades and “smart” technology is ubiquitous. As of 2013, there were more internet connected devices than people […]

Coming Soon-ish: Greener Auditing

Well, maybe. Eventually. Some time in the future. Over at the Harvard Business Review, there's a brief Q&A with Professor Robert Eccles about sustainability accounting standards. It's interesting because, as we've mentioned, sustainability (among other things) could become a big part of the accounting profession's future. We first covered sustainability accounting and reporting in an […]

PCAOB Finally Gonna Vote on Partner Disclosure

The PCAOB announced earlier today that it will hold an open meeting next Tuesday to vote on the disclosure rules for naming the audit partner and other accounting firms that participated in the audit. I'm told that it will be a unanimous approval. With that in mind, it's more than a little bit ironic that […]

Who’s #AuditorProud?

So here's a thing that is happening tomorrow: Use #AuditorProud & #PwC on Thursday to share your pride in the #accounting profession! pic.twitter.com/kp6M4TwozG — Bob Moritz (@Bob_Moritz) December 8, 2015 This whole thing is being spearheaded by the Center for Audit Quality who put out a fact sheet for anyone who's not familiar with how […]

What’s On Your Audit Partner Disclosure Wish List?

Earlier this week, we learned about a couple of Grant Thornton audits that were less than perfect. The partner on those engagements, Melissa Koeppel, had a poor track record with four restatements in two years, including the one that resulted from the infamous Koss Corporation fraud. No one outside of Grant Thornton had knowledge of […]

Fake Occupants Caused Some Some Problems in Grant Thornton’s Audit of Assisted Living Concepts

The SEC announced a settlement with Grant Thornton and two partners today over some bad audits that went down in America's Dairyland. The firm will pay $3 million in fines, plus forfeit $1.5 million in audit fees with interest. The partners, Melissa Koeppel and Jeffrey Robinson agreed to a $10k fine and a 5-year ban and $2.5k and 2-year ban, respectively.

PCAOB Member Wants a Closer Look at Tax Services and Auditor Independence

Last week the PCAOB approved its 2016 budget and also its "strategic plan" through 2019. That might sound like a more potent sleeping aid than tryptophan, but sometimes board members say interesting bits worth sharing and, today, we have some for you. Each of the board members made pretty benign statements — quibbles about the […]

A Surprising Number of Accountants Think Accountants Are Incredibly Corrupt

A recent survey of 1,696 global accountants from CareersInAudit.com found that accountant don't think too highly of other accountants: [I]t would appear that the accountancy profession is still not squeaky clean with all its working practices. 20% of respondents believe between 10–20% of those in the profession have helped their clients create a set of […]

Auditors, PCAOB Earn Attaboys From SEC Chief Accountant

SEC Chief Accountant James Schnurr says that, although "there's room for improvement" audit quality "is getting better" and the PCAOB has "deepened their expertise" and "their inspection process has matured." This explains why we've seen more deficiencies, he says. I'm sure KPMG appreciates the vote of confidence. [AT]

BDO Spain Took a Siesta on Some PCAOB Paperwork

Audit firms still seem to be getting used to having a regulator that watches their every move. Or failure to move in the case of BDO Auditores, SLP (aka "BDO Spain"). [T]he Firm became a respondent in two separate disciplinary proceedings initiated by the Instituto de Contabilidad y Auditoria de Cuentas ("ICAC"), the foreign auditor […]

Auditing’s Future: A Conversation With PwC’s Assurance Transformation Leader Bill Brennan

Auditing is a big deal in the accounting world, especially at Big 4 firms. While consulting and advisory services threaten to eclipse assurance as their chief revenue source, the fact remains that auditing remains the primary revenue stream for three of the Big 4 firms and serves as the foundation for all their reputations. But […]

So Much for the PCAOB Inspecting Audit Firms in China

Welp. After years of negotiation and Chairman Jim Doty saying this past summer that the PCAOB was "very close" to reaching an agreement to inspect audit firms in China, this happened: Last month, a final agreement that would have allowed a U.S. regulator to examine the audits of Chinese companies listed on American stock exchanges […]

Company Loses Bad Auditor; Disaster Ensues

When a company changes their auditors, it can be a bit of a headache. As inconvenient as it can be, I've never heard a company express despair over it until I read this 8-K from Nano Labs Corp. Their auditor was none other than Terry Johnson, the Florida CPA who didn't audit much for his […]

Reminder: Auditors Can’t Check Their Own Work

A superfecta of PCAOB enforcement orders hit the air yesterday, so let's take a looksee, shall we? Let's start with Turner, Jones and Company, featuring their managing partner Stephen Turner and regular ol' partner Mark Turbyfill. I'll be referring to them collectively as "Turn & Turb" from here on out. Turn & Turb did a […]

Not-So-Fine Opining: High School Auditors, Grant Thornton’s Independence Problems, Close Family Members

This week we have three (!) stories to share of auditors behaving badly. Story #1 is Michael J. Moore of Las Vegas. Back in 2009, MJM was barred from being associated with a PCAOB registered accounting firm and suspended from practicing before the SEC as an accountant. The reason? Among other things, he issued audits […]

Hey Look, McGladrey’s PCAOB Inspection Wasn’t So Good

The PCAOB released its inspection report for the accounting firm soon-to-be-formerly-known-as McGladrey yesterday and it's not the best but it's not the worst, either. Out of 15 audits selected, the inspectors found deficiencies in 7 of them. Most of the issues related to AS No. 5 and AS No. 13. It's all pretty shrug but […]

The Numbers Literally Didn’t Add Up In This Latest Case of Atrocious Auditing

On Friday we discussed a Florida CPA's bad auditing. Later that same day, the SEC issued a press release that told us about more bad auditing and I think you'll appreciate just how bad it is, so I'll share this one, too. This time around, we have a scam run by a Canadian lawyer and […]

Florida CPA’s Audits Didn’t Audit Much

This week in incredibly bad auditing, we have Terry L. Johnson of Casselberry, Florida. And if you like devouring stories of grossly deficient audits and Florida men doing ridiculous things, then this should satisfy your appetite. Let me just tell you first that some form of the words "so deficient that they amounted to no […]

Coming This Christmas: A Final Rule on Audit Partner Disclosure

In an Investor Advisory Group meeting held earlier this week, PCAOB Chairman James Doty said he hoped the third version of the Board's partner naming proposal would be finalized "by the end of the year." That should help the IMA fathom such an "insult to the accounting profession." [CW (Sub. req.)]

‘An Insult to the Accounting Profession’ and Other Highlights From Comments on the PCAOB’s Proposal to Disclose Names of Audit Firm Partners

Yesterday was the deadline for commenting on the PCAOB's concept proposal for disclosing the name of audit partners and "other participants in the audit." If this sounds familiar, it's because this was Plan C from the PCAOB (fourth round of comments) on this proposal and, miraculously, audit firms seem willing to live with disclosing partner […]

PCAOB Official Doesn’t Want Anyone To Freak Out But Holy Schnikes, Broker Dealer Audits Are Bad

If you read the PCAOB's press release on its annual inspection of broker-dealer audits, you sense disappointment: For inspections conducted in 2014, PCAOB staff identified independence findings in 26 of the 106 audits selected for inspection, primarily related to assisting with the preparation of financial statements. Twenty of those audits were performed by firms that […]

Auditors to Get Auditier

Here's someting auditors might not like: more work! In an interview with the Journal of Accountancy, Deloitte & Touche CEO and jargon generator Joe Ucuzoglu suggested that stuff like press releases, presentations, non-GAAP metrics, anything that companies throw in front of investors to gawk at, really, could be fair game for auditors: “Those metrics are […]

Dot VN, Inc. and PLS CPA: A Love Story in One 8-K

Like that miserable couple you know that have been together far too long, here's a, seemingly, dramatic auditor/client interlude, starting with an auditor walking out after years of neglect: On October 13, 2014, the Company was notified by PLS CPA, a Professional Corp. (“PLS”) that the firm resigned as the Company’s independent registered public accounting […]

#TBT: The Op-Ed By Andersen’s CEO in the Wake of Enron’s Bankruptcy

Enron declared bankruptcy on December 2, 2001. Two days later, Andersen CEO Joe Berardino wrote an op-ed in the Wall Street Journal, responded to the events in a very accountant-like fashion: My firm is Enron's auditor. We take seriously our responsibilities as participants in this capital-markets system; in particular, our role as auditors of year-end financial […]

Pope Figured The Lord’s Work Could Use a Good Auditor

Here's one way to stay out of hell:  The Vatican appointed its first auditor-general on Friday in Pope Francis' latest move aimed at ensuring transparency in the scandal-plagued finances at the headquarters of the Roman Catholic Church.   A statement said the pope, who has made cleaning up finances a major plank of his papacy, […]

Now That Auditing Is Joining The 21st Century, What Will It Be Like?

Recently the Washington Post interviewed new Deloitte & Touche CEO Joe Ucuzoglu about how he has always liked numbers and stuff. We don't necessarily recommend that you read it, as that's one of the services we provide around here — reading horrible interviews with Big 4 bigwigs — but there's one topic of discussion mentioned that the opiners […]

There’s a Bright Side to Getting Snowed in on an Audit and It’s Good Oral Hygiene

Thank you all for the outpouring of cards and letters regarding my recent brush with scurvy. One educated Internet user has informed me that I can go up to 60 days without vitamin C before contracting scurvy, which means I don’t have to grocery shop until spring. Yay! I’ve been thinking recently about all our […]

Auditors, Let’s Talk About the Worst Audit Room You’ve Ever Seen

Hey, at least it had a lightbulb.

Former Deloitte CEO Sorry Not Sorry for Anyone Who Can’t Handle Being on an Audit Committee

According to a piece from Michael Rapoport and Joann Lublin in the Wall Street Journal today, audit committees are the "junk drawer" of corporate boards. The workload of the powerful committees has expanded sharply beyond their core role of overseeing a company’s financial reporting. They are grappling with new regulations, whistleblower claims and issues like […]

How Internal Controls Will Keep You Safe From Velociraptors

Like any normal kid growing up in the early nineties, I harbored an unnatural obsession with Jeff Goldblum’s body (of work), including perhaps Goldblum’s finest moment (aside from his unquestionably riveting performance in Law & Order) as Dr. Ian Malcom in Jurassic Park. Yeah. I’d seen the movie and read the book about a thousand […]

Congratulations, Audit Managers, You Made Glassdoor’s 25 Best Jobs List

We're used to "accountant" making stupid lists from Yahoo on the world's best careers but what about this Glassdoor list of the 25 best jobs that came out today? Glassdoor explains the formula: The Glassdoor Job Score is determined using three key factors – earning potential based on average annual base salary, career opportunities rating […]

Auditor Phones in Auditing Revenue, Gets Totally Busted

The PCAOB posted 26 new inspection reports today, none of which were all that remarkable. But we did take a peek at MaloneBailey's, where we found this little nugget from Issuer C: In this audit, the Firm failed to perform sufficient procedures to determine whether the issuer properly recognized revenue. The issuer manufactured custom products […]

Baker Tilly Hong Kong Won’t Be Picking Up New Audit Clients Any Time Soon

For those of you constantly bellyaching about the pesky regulators and how "close enough" audits are perfectly acceptable, perhaps you should go work for Baker Tilly Hong Kong Limited. You see, that "close enough" mentality appears to have slapped them in the face, based on news from the SEC today: The Securities and Exchange Commission […]

Going Concern Presents: The Worst of Auditing 2014

Another day, another "year in review best of" list. Except this list is actually the "worst of" 2014. It's been an exciting year for auditing. PCAOB inspection rates were some of the worst to date, and then there was that whole thing where an audit partner was banging the Chief Accounting Officer at the client's. […]

Auditors Reminded That If They Keeping Screwing Up, They’ll Be Making the CAQ’s Job a Lot Harder

Auditors, consider this your friendly reminder not to fuck things up this busy season. Just in case you were thinking about blowing off revenue recognition or going concern issues (that's the standard, not this website), the Center for Audit Quality has released a cheat sheet for you. The following considerations should be strongly considered, per […]

Duh of the Day: Consulting Work by Audit Firms Could Possibly Impair Audit Integrity

The rise of non-audit services offered by accounting firms could threaten the quality and integrity of independent audits, said Steven Harris, a key member of the government’s watchdog agency. Although the Securities and Exchange Commission has limits on the kinds of consulting and advisory work audit firms can perform for their clients, that line may […]

And the Award for Most Innovative Audit Goes To…

The Investment Management Association (UK) recently held its inaugural Auditor Reporting awards and you'll be happy to hear three of the Big 4 were recognized for excellence in audit (I know you want to make a radio station joke here but read on and you KPMG haters will be disappointed): The awards were set out […]

KPMG Gives the Department of Homeland Security a Clean Audit Opinion Because of Course They Did

Now, we won't go so far as to imply that KPMG auditors preferred not to end up on the Do Not Fly List (might make their job a bit tough were that to happen), but we will say does anyone want to be the firm that gives Homeland Security a qualified opinion? The description in […]

Don’t Eat Hours, You Idiots

With yet another busy season approaching, it's time to open Pandora's Box yet again and talk about how you're billing your time. Specifically, how you're not billing your time. Like sleeping with coworkers and sending inappropriate gifs over the firm's messaging system, eating hours is something everyone does but doesn't really talk about. Does that […]

Florida Auditor Busted by SEC For Failure to Rotate

Come ON, man. This isn't even worth getting in trouble for. The Securities and Exchange Commission today sanctioned a Florida-based auditor for violating federal laws and regulations requiring lead audit partners to periodically rotate off their audit engagements with a publicly traded company in order to preserve the integrity of the financial reporting process.  The […]

Center for Audit Quality Managed to Find Some People Confident in Audits

With PCAOB inspection rates at their most embarrassing ever these days, you'd think most educated people would not be all that confident in audits. Of course, most "normal" people don't stay up on PCAOB inspection rates. We do, of course, which is why we thought it was hilarious that the Center for Audit Quality was […]

SEC Accuses Mayer Hoffman McCann of Really Stupid and Obvious Independence Violation

Let's break down this order from the SEC, filed last week, as simply as we can because A) I'm still high on cold pills and B) ain't nobody got time for that. Mayer Hoffman McCann (MHM) is "associated with" CBIZ (CBIZ) through an alternative practice structure (APS). This means MHM leases from CBIZ virtually all […]

#TBT: The Duty of an Auditor Back in 1896

Has an auditor's duty changed all that much in over a century? "It is the duty of an auditor to bring to bear on the work he has to perform that skill, care and caution which a reasonably careful, cautious auditor would use. What is reasonable skill, care and caution must depend on the particular […]

The PCAOB Has a Few Specific Criticisms for Auditors But Faith in Them Regardless

The Journal of Accountancy interviewed PCAOB board members Jay Hanson and Lewis Ferguson for a piece in its September issue and the conversation is surprisingly candid. For example, Ferguson totally gets that auditors are sick of the PCAOB's alleged moving target, but has faith these auditors will appease their regulatory overlords anyway: "I’m not aware […]

KPMG Vice Chair Thinks the Future of Audit Includes 100 Percent Testing

Let's pretend you're an alien who just landed on Earth and for some odd reason you decided accountants are the supreme beings of this planet, therefore you want to read all about them and clicked on over to Going Concern. "Audits?" you ask yourself. "What are those?" Currently, audits are designed to provide reasonable assurance, […]

Let’s Use the Center for Audit Quality’s New Auditor Judgment Tool to Decide on Lunch

The CAQ released a new Professional Judgment Resource today, "designed to provide auditors with an example of a decision-making process to facilitate important auditing and accounting judgments in a professionally skeptical manner." Get excited, people, this is awesome stuff: The Resource is aimed at assisting auditors who are responding to judgment challenges arising from the […]

TIL: Ancient Greeks Used Slaves as Auditors So They Could Be Beaten When They Screwed Up

I've had Jacob Soll's book The Reckoning: Financial Accountability and the Rise and Fall of Nations sitting in my bag forever, always intending to go up on the rooftop deck on a nice summer day with a cigar and a few beers to finish reading it. Of course, that never happens (usually because I drink […]

Grant Thornton May Have Hosed Fire Engine Company Audit

It appears the Financial Reporting Council — the UK's answer to audit cops — is looking into a "minor" matter involving the company that owns London's fire trucks and former auditor Grant Thornton. The investigation is specifically aimed at financial statements ended March 31 2008 – March 31 2010 and "the preparation of financial information […]

CAQ-Commissioned Study Finds Reasonable Assurance Somewhat More Reasonable These Days

We're sharing the following with you not because we think it is a sign that both clients and their auditors have cleaned up their acts but it is a perfect example of how dangerous data can be in the wrong hands. Let's take a look at the results of the work done by Susan Scholz, […]

It’s Completely Understandable Someone Might Sign Over 200 Audit Reports By Mistake

The LOLs just keep coming from across the pond — why doesn't the AICPA make a bigger deal out of accountants behaving badly? I'd love to see these stories front and center on the Journal of Accountancy like the ICAEW does with economia. Today's tale of accounting gone wrong is a woman who not only […]

KPMG Exec: If the Public Knew How the Audit Sausage Was Made, They’d Appreciate the Taste a Little More

"I can understand why the public at large might feel let down. In hindsight, it is tempting to wonder why auditors were not more alert to a possible financial crisis. If the diligence and expertise that underpin audit reports were more visible, public views of the profession would be far more favorable." – Isabelle Allen, […]

Tired of the Constant Badgering, NQ Mobile Has Fired PwC

Well, if that won't light the rumor mill on fire, I don't know what will. Let's see the press release: NQ Mobile (NYSE: NQ), a leading global provider of mobile Internet services, today announced that it has engaged Marcum Bernstein Pinchuk LLP (MBP) as its independent Registered Public Accountant. The Company's Audit Committee has dismissed […]

All These Years Later, the Fraud Triangle Is Still a Staple

Times may change and fraud schemes may evolve with those changes but for the most part, the root cause and therefore the subsequent behavior of would-be fraudsters generally remains the same. As the Journal of Accountancy wrote way back in 2000: It’s said that accountants’ predecessors were the scribes of ancient Egypt, who kept the […]

U.S. Companies Should Beware of “Ambiguous” Auditor Rotation in Europe

Damn you, globalization, all this stuff was so much easier when we shopped at mom and pop stores, salted our own pork for the winter and conducted business in wampum while avoiding dysentary and snake bites. But oh well, time must go on… As we know, the PCAOB has back-burnered auditor rotation in the U.S. […]

Crumbs Bake Shop Just Fulfilled Auditor Rothstein Kass’ Going Concern Prophecy

Only a few short weeks ago (May 15, to be exact), Rothstein Kass expressed substantial doubt about Crumbs' ability to continue as a going concern in a 10-Q filed with the SEC for the quarter ended March 31, 2014: The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplates the […]

The PCAOB Hopes To Check Audit Partner Naming Off Its To Do List This Year

The PCAOB has plenty to do, not least of which protecting the investing public and making sure those pesky auditors check the right boxes in their pursuit of passable audits. But now we have an idea what, specifically, they're working on through the end of the year. Forgive the screenshot, cutting and pasting from a […]

#TBT: The Pre-Enron Scandal That Warned Against Big 5 Firms Violating Independence

Just in time for Independence Day! From "The Pwc Scandal Changes Everything," which appeared in Businessweek back in February of 2000: Regulators are putting pressure on the entire profession. The SEC has directed the accounting industry's watchdog, the Public Oversight Board, to investigate seven other major accounting firms. The Big Five are being required to […]

Miserable Auditor Warns Those Who Wish to Follow Him

The Going Concern tip box is a dumping ground for information of great consequence and trifling tidbits; advice solicitations and fond (or not so fond) farewells; rants and raves. And every so often we get messages that seek to provoke existential questions to those who seek to follow in their footsteps. Like this one:    […]