Auditor independence issues are center stage once again, but post-Sarbanes-Oxley, the picture is quite different.
As evidenced in recent actions and remarks by Securities and Exchange Commission officials, auditor independence is high on the commission's list of priorities these days, and violators won't get off with a slap on the wrist.
Today's political and economic climate are a far cry from the days when former SEC Commissioner Arthur Levitt went head to head with the nation's largest accounting firms over independence issues, only to get beaten down by a powerful accounting lobby.
With WorldCom and Enron still in the papers and Sarbanes-Oxley in its arsenal, the SEC is sticking to its guns on independence issues.
The commission's crusade to stop accounting firms from charging contingency fees for providing tax work to companies they audit has become a very public battle that the profession appears poised to lose.
Reports surfaced recently that SEC chief accountant Donald Nicolaisen ordered some of the country's largest audit firms to fully disclose any contingency fee arrangements to the audit committees that oversee their work, and warned firms that they could face enforcement investigations over the fees.
Toronto's Royal Bank of Canada got a subpoena this month from the SEC related to the resignation of its former auditor, PricewaterhouseCoopers, the provision of non-audit services and RBC's policies and compliance procedures regarding auditor independence.
And Ernst & Young became the target of an informal SEC investigation into about $377,000 in payments to a consultant who also served on the board of three of the firm's audit clients: Korn/Ferry International, Best Buy Co. Inc. and TeleTech Holdings Inc. The SEC is looking to see if the payments violated the independence rules.
And perhaps the strongest signal that the SEC isn't taking such issues lightly came in April, when an SEC judge barred Ernst & Young from taking on new public company audit clients for six months because she said the firm violated independence rules by marketing consulting and tax services to audit client PeopleSoft Inc.
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