Thursday, August 05, 2010

PCOAB: Trouble Ahead for Sloppy Audit Supervision

The Public Company Accounting Oversight Board, citing a Sarbanes-Oxley provision, has put CPA firms on notice that top auditor review shortcomings which allow staff and senior auditors who fail to comply with accounting standards or state or federal laws. Acting PCAOB Chairman Daniel Goelzer criticized accounting firms for sometimes failing to provide sufficient supervisory oversight of field work and that added PCAOB sanctions appear to be a reasonable response. Nevertheless, a comment period is available until October 4 for those believing that such sanctions are unmerited.

The PCAOB response is understandible and may develop teeth if CPA firms cannot satisfy critics that supervision is presently sufficient. Clearly, the next move comes from the accounting profession: there is a clear need to demonstrate that sloppy field work or overly aggressive positions cannot survive the audit review process.


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