The Treasury Department's Advisory Committee on the Auditing Profession convened an open meeting to hear testimony on its draft report on recommendations for improving the profession, as well as to discuss an addendum with additional recommendations.
The new recommendations include urging the Public Company Accounting Oversight Board to undertake a standard-setting initiative to consider improvements to the auditor's reporting model. The addendum also discusses the question of whether to add the engagement partner's signature to the auditor's report.
"Advocates believe that such signatures will foster greater accountability of the individuals signing the auditor's report, although they note there is no intention to increase or decrease the responsibilities of the engagement partner," said the addendum.
Other topics concerned transparency and the PCAOB's recent proposal to require auditing firms to file annual and special reports (see PCAOB-Registered Firms Required to Submit Annual Reports). The committee also discussed liability issues impacting the profession, including whether Congress should be asked to provide federal courts with exclusive jurisdiction over some categories of claims, which presently may be brought in state courts against auditors.
Among the topics discussed at the meeting were concentration and competition in the audit market.
PricewaterhouseCoopers general counsel Charles W. Gerdts III contended that his firm faced plenty of competition. "PricewaterhouseCoopers' experience is that the marketplace for audit services is highly competitive at all levels of the market," he said. "We face strong competition from the other largest firms as well as from smaller and midsized firms."
However, a representative from a midsized firm, J.H. Cohn, capital markets and SEC practice director Kenneth Goldmann, noted that while his firm has been expanding its presence in the public company audit market, there are still obstacles. "Some of the hurdles faced by smaller CPA firms that desire to expand the number of their public company audit clients consist of the difficulty in establishing the internal infrastructure for handling either large numbers of public company clients or very large public company clients," he said. "Most of these internal hurdles arise because smaller firms, due to their size, cannot leverage economies of scale in certain areas."
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