Audit

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:    […]

Auditors Tell PCAOB They’d Rather Not Report on the Already Reported On

Back in August of 2013, the PCAOB floated a few new auditing standards that would bring major changes to audit reports: The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, which would supersede portions of AU sec. 508, Reports on Audited Financial Statements, and The Auditor's Responsibilities Regarding […]

What’s a Day in the Life of a Typical Audit Intern?

The New Jersey Society of CPAs has a breakdown of an average day for an audit intern, and by average we mean very average. As in, arrive at the office at 9am and leave promptly at 5pm. Do you remember those days? Let's see: 7:30am: Wake up, eat breakfast and get ready for work.  8:20am: […]

Some Companies Unsure About This New COSO Internal Control Framework

Some dates are not set in stone, like the day of the week I decide to clean the cat fountain or change my sheets. Others, like the day I need to pay my rent and the fiscal year-end on or after December 15, 2014 are not so variable. When it comes to COSO's new 2013 […]

Rothstein Kass Resigned ‘Immediately’ From a SEC Client Due To ‘A Transaction’

We aren't saying this is something, but we aren't saying it's not anything either if you catch our drift. Our friends over at Audit Analytics noticed an 8-K filed Wednesday with the SEC for biometric security provider Ceelox, Inc that interestingly enough says RK is out as their auditor, like ASAP: Rothstein Kass informed the […]

#TBT: George W. Bush Didn’t Want Arthur Andersen Looking For WMDs That Didn’t Exist

So infamous were Andersen’s false audits that President George W. Bush joked about them at the 2002 annual Alfalfa Club dinner in Washington, D.C. The president claimed he had good news and bad news from Saddam Hussein: “The good news is he is willing to let us inspect his biological and chemical warfare installations. The […]

Major Player in Audit Game Makes Unfortunate Audit Quality Word Choice

This week, the ICAEW held an Audit Quality Forum debate on Should auditors do more to make audit reports reliable? Everyone sort of agreed that there's work to be done when it comes to audit quality but whatever work is done should be done slowly. Very, very slowly. Case in point: One of the key […]

According to This, Suing Auditors Is Trendy Now

According to a Cornerstone Research report that you should absolutely read in its entirety if you are into this sort of stuff, lawyers are suing auditors more: Overall, auditor participation in class action settlements in the last several years has been lower than in the early years following passage of the Private Securities Litigation Reform […]

After Lifetime Ban on PwC Auditors, India Regulator Is Definitely Done With Satyam

The Indian Express: The chapter of Satyam scam is finally set to close as far as the accounting regulator, ICAI, is concerned. The Institute of Chartered Accountants of India (ICAI) has imposed a life-time ban on four auditors — S Gopalakrishna, Talluri Srinivas, V Srinivasu and VS Prabhakara Rao — involved in the Satyam Computers […]

Petty Thieves Being Mistaken for Big 4 Auditors Now

If there's one thing clients can't stand, it's a pesky auditor. They're always asking stupid questions, rummaging through the supply closet, drinking all free beverages. God, they're the worst.   Be that as it may, auditors are people too and it's unfortunate that we would receive a tip like this one from a Big 4 […]

Man Associated with AgFeed Fraud Adds Threatening Big 4 Watchdog to List of Bad Decisions

Everyone in the know knows that coming at Francine McKenna is generally not a good idea. Not only will she reduce you to a sniveling pile of human waste, she'll use your carcass to mop up your tears and then tell the Internet all about how she made you cry and send you a dry […]

Crowe Horwath’s Latest PCAOB Inspection Report is Bad But Not as Bad as Last Year

Clearly the fine folks at Crowe weren't following SALY, as their batting average has improved slightly over their last report. And by slightly we mean they got it right half of the time in 2012, which is still better than Grant Thornton and BDO. Still, it looks like AS 5 is to auditors as a […]

Sex at the Office During Busy Season, a Guide

We're hearing unconfirmed rumors from several sources that two auditors — a senior and a second year — were recently busted getting busy in the audit room at the client site. No, we aren't talking about getting busy ticking and tying, we mean getting down and dirty with a little one-on-one double entry. Since no […]

The SEC and Deloitte Are Cool on That Whole Longtop Thing Now, Guys

In the ongoing battle to get their paws on Chinese workpapers, one battle seems to be won… er, solved? I don't know what you'd call this, exactly, but as long as the SEC has the "substantial volume of documents" it has been asking for all this time, then I guess everything is cool (for now): […]

Marcum Wins and EY Loses the Final Auditor Shuffle of 2013

Accounting Today has shared Audit Analytics data on the Q4 2013 auditor shuffle and of large and national firms, Marcum came out on top with a net gain of five. I'm no mathlete but that's a whole… er… well it's more than EY's -6 net: Big Four firm KPMG and McGladrey followed up with net […]

Fraudsters Get High on Fraud, Auditors Get High on… Not Committing Fraud?

This groundbreaking idea brought to you by the AICPA Insights blog: According to a recent blog entry on the New York Times’ website, researchers have found that people who cheated, and got away with it, experienced a thrill, self-satisfaction and a sense of superiority. While that sensation was not as strong as the high that […]

Audit Firms Being More Audit Firm-y in Response to the PCAOB’s Disappointment in Their Audits

Colin buried this in ANR this morning but I'm pulling it out and tossing it at you all like a zookeeper flings raw meat at his wild tigers ifyoufeelme. Emily Chasan writes in CFO Journal: This year, financial executives say their external auditors are requesting far more documents and details than usual on everything from […]

Let’s Talk About Bad Review Notes in the Most Bitter Way Possible

Anyone else beginning to feel the frustration building in the air? It's certainly hitting our tip box: Just received the world's worst review note from a new Senior – "Why are all of these columns different widths?" BECAUSE THEY HAVE DIFFERENT INFORMATION. Please write an article about stupid review notes. Is that really the world's […]

Audit Fees By Industry, As Presented By Audit Analytics

Audit Analytics puts together some great data points from time to time, and this latest on audit fees by industry is no exception. Let's take a peek: In this entry, we investigated the relative audit fees of Russell 3000 companies on a broader industry basis (using the NAICS classification system), looking at audit fees compared to […]

According To These KPMG Guys Who Make a Ton of Money in Audit, Audits are Valuable

Seems legit. Let's exercise some professional skepticism here and ask ourselves if there is any conflict of interest in a bunch of guys who head up audit for KPMG telling us that audits are valuable:   As the world picks up the pieces following the global financial crisis, the value of audit and its role […]

Ex Crazy Eddie CFO Shares a Helpful Hint For Inventory Counts

Aww, Sam, you're such a helpful fellow, aren't you? Tip for Auditors: Beware of boobs, size 36 and up, when supervising inventory counts if u want to avoid an audit meltdown like Crazy Eddie — Sam E. Antar (@SamAntar) January 7, 2014 I'm not entirely sure why he qualified that tip with "size 36 and […]

Count Your Blessings For Not Being on These Horrible Inventory Counts

It's that time of year again, I'm busy doing a year-end inventory count of my cats and there may be a few of you huddled in freezers and barns and warehouses around the country asking yourselves "I mean just how material is this variance?"

We asked the auditors out there to share some inventory count horror stories and here are some of the best (or is that worst?).

Let's get right to it:

Contrary To One Opinion, Government Regulation Doesn’t Keep Hypocritical Libertarian Auditors In a Job

While I don’t want to re-open the PCAOB discussion or the cage match that ensued (response articles linked here and here), I’d like to approach a similar topic that was sparked in the discussion. This comment was made in response to my PCAOB article and even made it into our weekly Between The Spreadsheets newsletter […]

When CEOs and Audit Committee Members Are BFFs, Financial Statements Are Ps of S

Welcome to the latest edition of Accumulated Deprecation, Greg Kyte's monthly column. Go here to read more of Greg's posts. Dutch people are assholes. In the United States, under SarBox, a 100 percent independent audit committee's good enough, but a group of Dutch researchers1 don’t even want CEOs and audit committee members to be friends.2 […]

One Deloitte Office Wants Staff To Have a Restful Holiday With Friends, Family, and the Client

We're feeling a strong sense of bitterness coming from the tip box today: I'm an audit senior at Deloitte & Touche and wanted to send along this lovely E-mail every Audit staff member [in my office] received this afternoon.  Note that almost everyone has 10-20 learnings due Jan 4th that we were told to book […]

Here Are Some Viable Alternatives To Naming Audit Partners in Reports

Let no one say our comment section is pointless, offensive, and about as valuable as the stuff I scoop out of litter boxes every day. Would something so worthless come up with a gem like this? Who the lead audit partner is on the audit of a publicly traded company is irrelevant – he or […]

If A Tree Falls at a PCAOB Public Meeting About Partner Naming and No One Cares, Does It Make a Sound?

"The day after Thanksgiving is known in America as Black Friday – the opening of the pre-Christmas shopping season, when merchants launch midnight sales and dubious oddball discounts, and hordes of turkey-stuffed consumers storm the malls like barbarians at the gates. This year the 4th of December should go down in Washington as Dull Grey […]

The PCAOB Has Added “Information For Audit Committees” To Its Website

Audit committees play a vital role in the capital markets' investor protection framework through their oversight of the audit engagement and the company’s financial reporting process. The Sarbanes-Oxley Act of 2002, as amended, enhanced the scope of the oversight role played by the public company audit committee, by, among other things, making audit committees of listed […]

Auditor Musical Chairs a Little More Lively in 2013

We tracked over 1,000 auditor changes so far in 2013, compared to around 900 for all of 2012. #auditorchanges — Audit Analytics (@AuditAnalytics) November 8, 2013

CAQ’s Audit Committee Explainer Is a Perfect Commercial Filler for Your Saturday Morning Cartoon Lineup

According to CAQ's YouTube page, this was posted back on July 30 (SOX's birthday, no less) but was tweeted earlier this afternoon so we figured it was worth sharing: 

The AICPA Couldn’t Give Broker Dealer Audit Standards a Thumbs Up Without a Pat on Their Own Back

THE MAN HAS SPOKEN. This is the official statement from Barry Melancon in response to the PCAOB's proposed broker-dealer audit standards: “The AICPA is committed to activities that enhance audit quality and has been a leader assisting practitioners in achieving that goal. “We have been consistent in our position that brokers and dealers should be […]

Just in Time for the Holidays: A PCAOB Auditor ID Proposal

Auditors are traditionally quiet participants in a company’s final annual report, signing their firm’s name on a form letter with a simple pass or fail grade. But a push to gain more insight into their process is growing globally, meeting demands for more disclosure from both regulators and investors. The Public Company Accounting Oversight Board, the […]

Here Are a Couple of Charts That Sum Up Auditor Fees since 2002

Courtesy of our friends at Audit Analytics, who have just issued a new study evaluating the trends of audit fees and non-audit fees earned from accelerated filers over the past 11 years.  As you can see, it appears that audit firms have found a comfort zone in its split between audit/non-audit fees. And in this […]

Auditors of Broker-Dealers Are Letting Us All Down

COME ON, YOU GUYS. You're making EY look really good and that is no small feat. Here's what PCAOB Member Jay Hanson had to say during the call with reporters about the Board's second progress report on interim inspection program for broker and dealer auditors:  “The number of firms and audits inspected are greater than […]

U.S. Chamber of Commerce Phoned in Its Opposition to the PCAOB’s Revised Auditor Report Proposals

If there's one thing that you can count on when regulators propose rules that will shake things up a bit, it's a whole-hearted opposition from the U.S. Chamber of Commerce. The Chamber's Center for Capital Markets Competitiveness's comment letter for the Concept Release was 20 pages long and is summed up quite well by this […]

Here’s How the Top Eight Audit Firms Ranked in PCAOB Inspection Error Rate

This got by us for some reason, but Compliance Week noted Crowe Horwath's atrocious error rate in its 2011 PCAOB inspection reports was by far the worst among the eight largest audit firms. Here's the ranking of firms, from best to worst, and their error rate: 1. KPMG — 22.6%2. EY — 35.7%3. BDO — 39.1%4. Grant […]

The Ideas in This Revamped Auditor’s Report Are Great Because Audit Firms Will Hate Most (if Not All) of Them

Michael Rapoport at the Wall Street Journal has a great article today that gives us a good idea of what kind of information would be contained in a useful auditor's report since we all know that, in its current form, it's more or less useless. This is not hyperbole, since a study entitled "Improving the Auditor's Report" from 2011 […]

China Ready to Turn Over Audit Workpapers for Some Company at Some Point

The U.S. Securities and Exchange Commission has been struggling to obtain papers from China to investigate possible accounting fraud at dozens of Chinese companies listed on U.S. stock exchanges. China has resisted for years turning over documents because of state-secrets and sovereignty concerns. The China Securities Regulatory Commission (CSRC) is now ready to transfer audit papers […]

Another One of Deloitte’s Former Chinese Clients Has Been Charged with Fraud

When fraud allegations first arose in 2011 against China MediaExpress, CEO Zheng Cheng countered with confidence, telling shareholders that everything was tip-top and the company had a 'reputable and well-known' audit firm behind them. Of course, later that firm — Deloitte — resigned, along with the CFO.  I suppose when you're in a situation like […]

Maybe Now You’ll Take the Opposition to Auditor Rotation Seriously

It's fair to say that accounting firms are conservative organizations. That is, they prefer that things in their world remain more or less the same and when extremely rare and unforeseen events occur that mandate change, it be carried out with as little disruption as possible and on their terms. NBD, right?   The PCAOB, […]

UK Regulator Tasked with Focusing on Audit Quality May Be Tasked with Focusing a Little Less on Audit Quality

When it comes to Big 4 bustin', UK regulators have proven the most willing to throw poo at a wall to see what sticks. Specifically, the Queendom's Competition Commission has decided that the Big 4's stranglehold on the FTSE is a little too tight for their liking and have been trying to come up with […]

Guest Post: The PCAOB Is Our Parents Now

Ed. note: The following was written exclusively for Going Concern by a Big 4 auditor who wished to remain anonymous. 

The PCAOB is turning into our parents. Or at least they are using the same tactics in handing out punishment. “We know you were up to no good last night, so if you just tell us what you did we’ll take that into consideration when deciding how long to ground you.”

Public Company CFO Says Naming Audit Partner Is NBD

Andy Bishop is the chief financial officer of Hallador Energy, a publicly traded coal company. Like many CFOs, he did a little bit of time at a large accounting firm, so he knows a thing or two about auditing and pays attention to the haps in that space. So when he heard that the PCAOB […]

This ‘Fighting Fraud’ Video from the CAQ Isn’t Going to Help That Expectations Gap Problem Auditors Love to Complain About

Most people like to learn in some sort of visual fashion. Reading? BORING. Lectures? AWFUL. There needs to be action, bright colors, and a damsel in distress — bonus points if there's a scene of frontal nudity — to get people to pay attention for longer than five minutes.  Investors in public companies are no […]

Hey Look, Internal Auditing Works!

Pardon my ignorance, but do you guys and gals picture internal auditors working in windowless broom closets, only leaving when they have to catch a plane to some remote location in flyover country to conduct procedures that they've done so many times that they dream about checklists and, on the rare occasion, find inconsequential errors […]

Warren Buffett Has No Use for Auditors

In one instance at least!  Here's a little anecdote courtesy of the ubiquitous Business Insider: [I]n 1984, Berkshire highlighted its purchase of Nebraska Furniture Mart [in its annual letter to investors]. Buffett was a huge fan of NFM's chairman, the 91-year-old Rose Blumkin, who he affectionately referred to as "Mrs. B." Here's an excerpt: I […]

According to This Dude Who May Have Helped Screw It Up, CliftonLarsonAllen Totally Screwed Up on the Dixon Audit

Meanwhile, back at the horse ranch: Sam Card says that CliftonLarsonAllen continued to do an audit for the city, despite guidelines that said they should not. In an October deposition statement, Card said that he and his mother’s small Sterling accounting office, which became Dixon’s contracted auditor after 2005, did not do its own audit […]

ICYMI: Here’s a Hitler Video That Might Help Your Company Decide If It Should Outsource Its Internal Audit Function

The Hitler video meme died long ago, but I regret missing this jump the shark moment from 2010 when "Hitler Finds Out the Board is Keeping Internal Audit In-House." Mostly because I try to deliver these weighty stories to you all in a timely fashion, but even moreso that there's a slight dig at the […]

Compensation Watch: Internal Auditors

Good news for the internal auditors out there — a study by the IIA found that more of you are getting raises; the bad news is they also found that everyone's share is slightly smaller: The number of U.S. organizations awarding raises to their entire internal audit staff increased from 60 percent in 2011 to […]

Auditors Not Being Credited with “Better Letter Than Never” in Discovery of Pennsylvania School District’s $15 Million Error

In yesterday's Footnotes, we mentioned that the Reading, Pennsylvania School District sorta overstated the amount of a subsidy that it received from the Keystone State. An unfortunate error that will likely result in cutbacks for another struggling school district.  Because the children are being wronged here, there is plenty of outrage and blamestorming going around. […]

Ex-KPMG Chief to Auditors: You Are All Flirting With Irrelevance

According to a Financial Times article posted today, KPMG UK's former head John Griffith-Jones — who is now a regulator for the UK's Financial Conduct Authority — dropped a bomb at a posh lunch for accountants in London recently. Griffith-Jones verbalized what many of us already know and have been saying for years. FT says […]

Occupy the Audit Committee: Why Not Include PCAOB Inspections in Proxy Statements?

Every year, my mailbox gets cluttered up with huge proxy statement packets filled with a bunch of crap I won't read. And every year, I vote against the Big 4 accounting firm recommended by the Board. Why? Because it's the only way to stick it to the man now that I've sold out, obviously. In […]

Here Are Five of the Lowliest Lowlights in Auditing from 2012

You have to admit it — auditing is a rough gig. You're expected to meet expectations of both regulators and clients, all the while, keeping enough employees on hand so the job can actually get done in a reasonable amount of time. Oh! Then there are the investors; they fit in there somewhere (or so […]

Center for Audit Quality Issues Latest Late-to-the-Party Statement

Just in case anyone missed the PCAOB Inspection Report on ICFR, the Center for Audit Quality has issued a timely statement reminding everyone to read it. Thanks guys, we totally might have missed that without Executive Director Cindy Fornelli's reminder. "The PCAOB has issued a report summarizing common inspection findings in the area of internal […]

ParenteBeard’s “Audit” of Santa Is as Reliable as Santa Himself

ParenteBeard, the 23rd largest CPA firm on the whole damn planet, issued the following press release earlier this month. This holiday season, ParenteBeard, a top 25 U.S. accounting firm, is helping to balance the books of what would be the largest nonprofit in the world: Santa, Inc. […] ParenteBeard began its audit of Santa, Inc. […]

Big 4 Firm Doesn’t Appreciate the Insinuation That Former Big 4 Employees Are Anything Less Than 100% Objective When Choosing an Audit Firm

It has become increasingly clear that the front line of the war on audit firm oligarchs is in the U.K. While regulators and observers in the U.S. seem ambivalent about the Final Four Horsemen of the Financial Apocalypse, the British have seemed quite content to irritate the Big 4 with their Competition Commission's insistence that […]

Batman Auditor Gives Scooby Doo a Run For His Scooby Snacks

I'm starting to think we need a Going Concern Halloween costume contest next year. There's always the old "reverse merger" idea or, failing that if you don't want to scare away the client with innuendo, you could always go as the douchey vending machine. Anyway, as we know Halloween has come and gone but that […]

Being an Independent Auditor Is So Much Easier (and Effective) If You Are a Total Prick

I love HGTV in fact but not in appearance. No one looks at me and thinks, "I bet that guy TiVos Yard Crashers, Curb Appeal, and House Hunters," but I do. And although I think Hilari was robbed in Design Star All Stars, I never really talk about it with anybody. Fortunately, there is no […]

Big 4 PCAOB Inspection Reports to Be SALY

If a person was going to describe the 2010 PCAOB inspection results, you might hear things like, "didn't meet expectations" or "downright embarrassing" or "an abomination" or they may just make Hans Hoogervorst's favorite hand gesture. Simply, they weren't so good. The good news is there's no place to go but up. The bad news is […]

Anecdotal, Unverifiable Evidence Confirms That Broker-Dealer Audits Are as Bad as You Thought They Were

Digging through the mailbag, I found this little gem: I'm not surprised broker dealer audits are bad. I used to be on a high profile one and let me tell you I spent so much time to trying to understand the business. At the end of the day, you get a general idea as to the operations BUT […]

Going Concern Warnings Are Worthless

Just a few years ago, a number of companies failed, were rescued by competitors (if you can call it a rescue) while on the brink, or bailed out by the federal government. It was a pretty exciting time! One of the downsides of all this drama was that you, me, EVERYBODY lost a lot of […]

Grant Thornton Audit Partner Can Barely Keep From Laughing at PwC’s Claim That UK Audit Market Is ‘Fiercely Competitive’

For some time now, second-tier audit firms in the UK have been bent out of shape about the domination of the Big 4. And seeing how one of the Final Four Horsemen of the accounting apocalypse is auditing 99 out of 100 FTSE companies (and 240 of the FTSE 250), they may have a legitimate beef. On […]

A Friendly Reminder for Auditors: Be Skeptical

If you're an opiner who has been suffering from massive memory loss or ignoring your professional purpose, don't fret. Master audit firm lobbyist Cynthia Fornelli has your playabook: “Independence, objectivity and skepticism, I think, are fundamental foundational elements of audit quality,” Fornelli said in an interview at the Accounting Today offices on Friday. Now that […]

PCAOB’s Latest Report Finds That Auditors of Broker-Dealers Suck, Too

PCAOB Auditor Wrecking Ball Tour 2012 rolls on with the an interim report on the auditors of broker-dealers. And this time there's 100% deficiency!  From the Executive Summary of the Report on the Progress of the Interim Inspection Program Related to Audits of Brokers and Dealers:  This report presents observations from inspections of portions of […]

“Same As Last Year” and Inept Senior Auditors Are Failures of the Audit Industry

The following was written by a second year staff auditor who wishes to remain nameless. Clearly pounded out in the heat of frustration and perhaps a tad profanity-laden, it exposes a very serious problem that infects all corners of auditing from so-called "expert" auditors on down to brand new staff. Fresh-faced youngsters are often tasked […]

Just in Case There Are Audit Committee Members Out There Slacking on the Job, The PCAOB Has Released a Guide to Its Inspections That Should Catch You Up on Things

Are you a member of an audit committee that's been phoning it in? Or are you a newbie that's feeling upstaged by your fellow audit committee buds that are the so-called financial experts? Maybe you're skeptical of the words coming out of your audit firm's piehole(s) but you're not sure how to respond? Fear not! […]

CFTC Chairman Knows PFGBest Auditors Shouldn’t Have Passed GAAS

Gary Gensler, who may or may not be aware that PFGBest's auditor preferred to don jorts at the (home) office, is familiar enough with auditing standards to know there are certain ones that always need to happen: Commodity Futures Trading Commission Chairman Gary Gensler told lawmakers on Wednesday that Peregrine Financial Group's outside auditors should […]

Deloitte Achieves Another Unflattering Milestone in Audit Quality

As you well know, the quality of work performed by Big 4 auditors has been called into question aloud on a regular basis since the fall of 2008. Oh sure, you might say that ever since there was a Final 4 (circa 2002) there have been haters, but since we all came to the brink […]

How To Tell If the Hot Auditor Is Trying To Tell You She Wants You

I don't read Cosmo because, well, I already know 50 Ways to Drive My Man Wild (49 of them involve Bravo Juliets and one involves things I'd rather not admit I do, amiright ladies?) but while combing the Internet for elusive hot accountants to add to our Accounting Hotties board on Pinterest, I came across […]

The Number of Financial Statement Audit Deficiencies Is Blowing Up

So says an analysis of PCAOB inspection report data: The Survey of Fair Value Audit Deficiencies was released Wednesday by Acuitas, Inc., an Atlanta CPA firm that practices litigation and business valuation services. The analysis found that fair value measurement and impairment deficiencies accounted for 52 percent of all the audit deficiencies cited in the […]

Audit Leaders Use AICPA Council to Vent About ‘Crisis’ at Partner Level

Knowing you guys as well as I do, I realize it's pointless to bore you with details from Council; like how Tom Hood got snapped at by a very frustrated Maryland senator in her office or what people wore to last night's black tie gala. However, I will share with you an interesting panel yesterday […]

Auditing in China Sounds Like Pure Hell

Muddy Waters Director of Research, Carson Block wrote an op-ed for the Wall Street Journal today and he sheds some light on problems that Big 4 auditors are facing in China. And from the sounds of it, if you're used to the auditing standards in the west, then you have your work cut out for […]

Is the Next Wave of Auditor Resignations Coming?

Floyd Norris notes: Several Chinese companies that are registered in the United States missed the May 1 deadline for filing their annual reports and received two-week extensions. There are many reasons that a company’s report can be delayed, but given the recent history there is speculation that one or more companies might be fighting with […]

Florida Man Didn’t Play the Part of a Dunkin’ Donuts Auditor Too Well

When impersonating an auditor, there are certain distinguishing features and mannerisms that you must employ to successfully dupe your mark. A person rocking banal business casual threads, schlepping a backpack, wearing sensible spectacles, and a tidy haircut works in way of appearance. As far as behavior is concerned, generally speaking, you should always try to […]

The Dixon, Illinois Fraud Is the Latest Example of Why Reasonable Assurance Is Bullshit

As you know, the former CFO of DIxon, Illinois, Rita Crundwell, has been accused of misappropriating $30,236,503 and 51¢ from Ronald Reagan's boyhood home. It's a haul of Sue Sachdeva proportions, although it appears that obsessive shopping wasn't so much the motive as it was a My Little Pony fascination for a grown woman. ANYWAY, […]