Appointed to serve as the first executive director of the Center for Audit Quality, Cindy Fornelli is guiding the new organization in its mission to bolster confidence in the audit process, and to aid investors by promoting constructive suggestions for change.Still affiliated with the American Institute of CPAs, the center is the revamped version of the AICPA’s former Center for Public Company Audit Firms. The CAQ Governing Board consists of representatives from the AICPA, the major public company auditing firms and independent public members.
Prior to joining the center, Fornelli spent time with Bank of America, as its regulatory and conflicts management executive, and with the Securities and Exchange Commission, where she served as deputy director in the Division of Investment Management. At the SEC, where several of the center’s new hires have been culled from, Fornelli was responsible for implementing SEC policy, rules and regulations in the investment industries.
In an exchange with WebCPA, Fornelli talked about the organization’s first public dialogue (held in Denver in late April), how it will approach fulfilling its mission, and the staff she has begun to assemble.
You’ve said that the next several months are going to be about bringing key stakeholders to the table and hearing what they want to talk about. What comes after that?
As you know, the Center for Audit Quality has launched a national public dialogue tour; we had our first event April 26 in Denver. We’re going to travel throughout the U.S. in the next 12 months, with the goal of achieving what we realized in Denver -- a robust, spirited discussion among investors, policy-makers, company leadership and other information users about ways to modernize business reporting.
Once we’ve completed our tour, we’ll compile the common themes and suggestions into a report, which will include observations and a framework for the next steps. We will share our findings and this report with everyone interested in a vibrant capital markets system. We had a great discussion in Denver, with lots of give and take, and we’re going to stay in touch with those participants, as well, so that they can continue to provide us with ideas and suggestions as we gather the same in other cities.
Is the center more about education and discussion, or impacting legislation and standards?
In conceiving the center, members of the profession spent a lot of time trying to determine how it could serve investors and the markets. Those involved in the center’s creation concluded that the investment world is at a critical juncture -- as investors and the public become even more deeply dependent on the vibrancy of capital markets, the markets themselves are becoming increasingly global and complex.
The center wants to be an expert resource and catalyst for public education and discussion on public company auditing, and will also seek to ensure that the public company audit becomes even more reliable. We want to be a resource to our members. And, the center will weigh in on important issues and policy proposals that will impact investors and the vibrancy of the capital markets.
How strong a role do you see the center playing in the debate around auditor liability?
Audit firm sustainability is a topic that’s being discussed by many market participants these days, both at home and abroad. A wide range of voices has expressed concern about the negative impact on investors if any of the larger global audit firms were to disappear. This is an important debate, as it is a real concern for the markets. But the Center for Audit Quality is focusing its agenda on broader issues, such as audit quality and modernizing business reporting, among others.
Why structure the center as being just “affiliated” with the AICPA, as opposed to the center’s former incarnation, which operated under the AICPA umbrella?
The chief executive of the AICPA, Barry Melancon, serves on the center’s Governing Board. The AICPA’s support and involvement are critical to the CAQ. The decision to restructure the Center for Public Company Audit Firms and make it an autonomous organization -- the CAQ -- was based on a real need to join with public leaders in the investor and corporate communities to expand the focus to issues facing the capital markets, to conduct research on these topics and to make recommendations to foster investor confidence. This was a shift and expansion from the CPCAF, which realized important achievements, including improving transparency for the public company auditing profession, but was more focused on technical issues.
Can you describe the center’s relationship with major regulators, such as the Securities and Exchange Commission and the Public Company Accounting Oversight Board?
As part of its effort to communicate with investors, issuers and others in the capital markets, the center pays close attention to matters that could affect the reliability and quality of the public company audit. We’ll provide perspective and insight, based on our experience and expertise, to policy-makers as they address these matters; we recognize that we sit in a unique position that puts us essentially at the intersection of what investors want and expect in company financial reports and how the companies themselves produce that information.
As our comment letters to the SEC and PCAOB on possible changes in the implementation of Section 404 of the Sarbanes-Oxley Act make clear, we view all potential regulatory and legislative changes through the prism of what’s best for investors.
How large is the center’s full-time staff? What key hires have you made, and are you still looking to make?
The CAQ currently has eight full-time professional staff members, and the staff begins with Jane Cobb, the center’s director of operations. Before joining the center, Jane served as the head of congressional affairs at the SEC.
In addition to Jane, we have just hired Lori Schock and Bob Burns. Lori, who started on April 30, serves as the center’s director of outreach, and will be responsible for the center’s efforts to communicate and partner with investors, academics and other third-party stakeholders interested in issues related to audit quality. She’s a natural for the position, having worked at the SEC as the acting director of the office of investor education and assistance, [where she was] charged with handling questions and complaints by investors to the SEC.
Bob Burns, who will start later this month, will serve as the center’s director of research, and will be responsible for leading the center's research efforts on advancing audit quality. His work will focus on improving methods for fraud detection, enhancing financial reporting and finding ways to recruit talent to the profession. Before joining the center, Bob served as chief counsel in the Office of the Chief Accountant at the SEC since 1984.
We also have Lillian Ceynowa, the director of professional practice and member relations. Lillian oversees a team of people who fulfill the technical mission of the center through the vital development of technical and educational information for our members. They answer technical queries and deal with issues raised by the nearly 800 public company auditing firms that belong to the CAQ. Lillian and her team also share technical and educational information and “best practices” ideas with the CAQ membership.
