In talking to accountants about the impact of Sarbanes-Oxley on the profession, I notice one common theme running through all the comments, both those of doom and gloom and those of optimism. It is an air of uncertainty.
The uncertainty begins with the concern over how the Public Company Accounting Oversight Board (PCAOB) will perform, and the extent to which it will further restrict the non-audit service activities of accounting firms conducting audits. The unease extends to how much will cascade down to the state level and impact services that accounting firms provide to nonpublic companies.
Virtually every accounting firm that audits public companies is analyzing in detail whether they should continue providing the service. Part of that analysis involves the inability to sell to auditing clients certain prohibited nonaudit services, and whether a niche involving a prohibited service still pays for the firm. Likewise, the impact of the Act on whether the firm should merge, and its attractiveness as a merger candidate is being actively studied.
Yes, there are those that see the Act as providing a number of possible opportunities. They feel that more companies, because of legislative and regulatory requirements and marketplace reactions, will be looking for additional service providers. Others see the audit being strengthened, and predict a dramatic change to the financial reporting rules, taking them out of the current industrial revolution-based model and into the information age. There is also comfort in that there is now a Republican Congress, and the California legislation wasn't as bad as it could have been.
However, all those in the profession are eagerly awaiting the initial actions of the PCAOB, and watching for the laws enacted by the 2003 state legislative sessions and regulatory actions of state boards. Add to that the worry that another accounting firm will end up being closely identified with another financial failure of a public company due to fraudulent transactions. Should that be a worry? Yes, especially after listening to Joseph Berandino, former managing partner and CEO of Andersen, at the recent AICPA State of the Profession Conference. He indicates that the remaining Big Four are still basically doing business as usual.
Perhaps this overall widespread anxiety by accountants is justified.
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