During the recent New York Accounting Technology and CPE conference, an executive from the vendor community and I were reminiscing about a long- forgotten restaurant chain that appealed to economically challenged college students like us, with their burger and beer combination for under $10.
As someone who covered that industry for 12 years I remembered how in a revitalization attempt, the above-mentioned chain lured aboard a series of high-profile management types who, despite years of boilerplate catchphrases and proposed strategies, succeeded only in creating scores of real estate opportunities for other more appealing and progressive dining concepts.
I realize that's a bit of an unconventional segue to last week's announcement of a soon-to-be-unveiled new auditor model by PCAOB chairman James Doty. But as someone who has written his share of stories chronicling early bluster, only to lead to inertia and eventual flameout, I sense this oversight chair will be a bit more aggressive than his predecessors.
For one, early in his tenure, he reached out to publications like ours - those who actually cover the auditing profession full time - for interview opportunities and did not view us as the equivalent of editorial steerage, something that cannot be said of his predecessors. Several of them would have difficulty locating Accounting Today on Google, but had no trouble speaking regularly to, for example, the New York Times.
But I digress.
In his speech, Doty touched on several areas that, in fairness, had been broached before but now need definitive action including making disciplinary proceedings for auditing firms public, which to become a reality, would require a change in Sarbanes-Oxley.
He also addressed the payment model, pointing out that the auditor is still hired and dismissed by the audit committee of the client - which in today's economic uncertainty is often more concerned with negotiating lower audit fees as opposed to eliciting independence and objectivity.
He rightly shot down market concentration reduction proposals from the UK and the European Commission to break up the Big Four, which in the category of "nobody asked me but..." would usher in a new set of problems.
He also noted the conflicts of interest that auditors face with regard to going concern assumptions. They're forced into a high wire act - listening to people who both prepare the market valuations for a company and trade said company's equities.
I realize that it's still fairly early, but Doty appears to be ready to spearhead much-needed reform within the audit community.
In another life he may have helped save the $10 burger and beer combo.
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