October 23, 2018

Martin Baumann Found a Job at Another Auditing Standard-Setter With a Five-Letter Acronym

Nearly four months after he left his position of chief auditor and director of professional standards at the Public Company Accounting Oversight Board (PCAOB), Martin Baumann has a new gig: chair of the International Auditing and Assurance Standards Board (IAASB).

Baumann, who was appointed to a three-year term that begins on Jan. 1, 2019, replaces Arnold Schilder, who has served as IAASB chairman since January 2009. Schilder’s current term expires at the end of 2018.

A lot will be expected of Baumann, according to a buzzwordy Sept. 14 IAASB press release announcing his hire:

As Chair, Mr. Baumann will lead the IAASB though an environment of rapid advances in current and emerging technology and changes in the breadth and complexity of information needed by investors and other stakeholders. He will be responsible for leading the finalization and implementation of IAASB’s strategic objectives; actively engaging key stakeholders around the world, including national standard setters, regulators, investors and firms of all sizes; and delivering timely high-quality standards in the public interest.

But Baumann is up for the challenge:

“The IAASB plays a vital role in the world’s capital markets. High-quality professional standards developed in the public interest by the IAASB provide the markets with confidence in the important work done by auditors,” said Mr. Baumann. “I am committed to working tirelessly to ensure the IAASB meets its mandate, and continues to be recognized as a highly-regarded independent organization developing high-quality standards.”

Baumann is no stranger to the IAASB, as he had previously served on the IAASB Consultative Advisory Group.

Some of you may remember Baumann from such roles as partner, global banking leader, and deputy chairman of the Global Financial Services practice at PwC; or as executive vice president of finance and CFO of Freddie Mac. But most of you know him from his time spent at 1666 K Street NW in Washington, DC.

Baumann joined the PCAOB in 2006 and served as director of the Office of Research and Analysis from 2007 to 2009, before becoming chief auditor. During his tenure as chief auditor, the PCAOB released a rule that now requires the disclosure of the audit engagement partner in a public company audit on a new PCAOB form. The board also overhauled the auditor’s report during Baumann’s time as chief auditor.

In addition, Baumann oversaw the creation and adoption of eight new auditing standards that “created a new framework to enhance the effectiveness of the auditor’s assessment of, and response to, the risks of material misstatement in financial statements,” the PCAOB noted in its “goodbye, Marty” press release last May.

After the Securities and Exchange Commission brought in a new PCAOB chairman and a whole new board late last year, several high-ranking PCAOB officials—including Baumann; Helen Munter, director of registration and inspections; and Claudius Modesti, director of the PCAOB’s Division of Enforcement and Investigations—got up outta there.

Baumann will join the IAASB in late October and work with Schilder to ensure the transition goes smoothly.

Related articles

PCAOB: The Rodney Dangerfield of Bureaucracies

pcaob.gif It’s tough being part of a bureaucracy, especially if you’re doing something as glamarous as babysitting auditors. The CIA, FBI, NSA have got it easy. You get to catch bad guys, use guns, and Hollywood makes movies about you. Aside from the warrantless wiretaps and otherwise general big brotherishness, it’s cool.
The PCAOB doesn’t get that luxury. They get to poke around auditors’ work and then tell them how much they suck at it. Not so fun for anybody. They also get to write auditing standards. Take the watchdog aspect, multiply it times infinity, and that’s about the amount fun we’re talking about for writing rules on auditing.
But now people are saying they’re too slow in writing these I-already-want-to-kill-myself boring rules? Yep:

“Given how little they’ve accomplished in the standards-setting area, they don’t get a passing grade,” says Lynn Turner, a former chief accountant for the SEC.
Turner says he and a group of investor advocates wrote to the PCAOB in 2004, asking it to improve fraud standards. But the work remains undone, he says.
Bill Gradison, the board member whose term expires in October, calls the criticism fair. “We’ve been much slower than other standards writers,” he says.
By comparison, the International Auditing and Assurance Standards Board, which sets international auditing standards, among other duties, finished revising its own standards in March. The process, which included 37 standards, took about five years

Man, now comparisons to the Europeans. They’re looking for some new blood at the PCAOB though, since Mark Olson is retiring as Chairman and another board member’s term is expiring.
But don’t you go calling them lazy! “the PCAOB is taken seriously by the auditing community and deserves credit for trying. ‘Anyone who says it isn’t is off the wall,'”
What a ringing endorsement.

COMPLIANCE WATCH: Oversight Board Sets Sluggish Pace
[WSJ]

PCAOB, We Need to Have a Talk

pcaob.gifPCAOB, we here at Going Concern want to help you get some respect. We really do.
We don’t think it’s fair that people think you’re slow at writing rules for auditors. Okay, maybe you could pick up the pace a little bit but we know that it takes a lot of work and patience to write those rules. But then we heard about this and we want to let you know that we aren’t angry, you’re just letting us down.
Reuters:

The U.S. audit watchdog voted on Thursday to defer its first inspection on 49 foreign auditors in areas such as the European Union, China and Switzerland for up to three years.

Like we said, we’re not mad. We’re disappointed.

US PCAOB delays 1st review of 49 foreign auditors
[Reuters]