The Accounting Policy & Practice Report ® provides financial accounting policy makers, advisors, and practitioners with the latest news, expert insights, and guidance on emerging, evolving,...
Taking a “fresh look” at governance—including the appointment of outside directors—is one step audit firms can take to meet the high expectations of corporate investors, a top Securities and Exchange Commission official told a financial reporting conference.
SEC Chief Accountant Wes Bricker also said that audit firms should share with the audit committees that hire them details about their board’s makeup, responsibilities, and why an outside director could be considered independent.
“The leaders of largest, most complex firms have appointed or are now taking steps to appoint independent directors,” Bricker said during his address to the annual Baruch College Financial Reporting Conference in New York. His speech focused on audit quality and the profession’s ability to maintain trust among clients and investors.
“They understand that the benefits of outside perspectives can translate to audit firm governance.”
Bricker didn’t name the firms that have updated their boards or are taking steps to do so. However, KPMG LLP announced last week that it would add as many as three external directors to its board. PricewaterhouseCoopers LLP added external board members last year.
Bricker told Bloomberg Tax that the addition of the external directors was an important change because it would help to strengthen the firms and help them to plan for serving investor needs today and in the future.
The Big Four accounting firms serve as the auditors to the largest publicly traded U.S. corporations, and their audit reports play a key role in the financial markets by ensuring the reliability of a company’s finances to investors.
Outrage against lending abuses at Wells Fargo & Co. and accounting problems at General Electric Corp. shook shareholders’ confidence in the companies’ auditor, KPMG, in recent weeks. A shareholder revolt tried unsuccessfully to force the companies to fire the firm.
KPMG also suffered a black eye earlier this year when three of its employees were arrested and charged with trying to steal audit examination details from the Public Company Accounting Oversight Board.
“Auditing is about confidence and trust in the transparency, the accuracy, and the reliability of the financial information,” Bricker said. “The profession most continue to focus, and in some respects do more, to maintain and nurture trust.”
To contact the reporter on this story: Amanda Iacone in New York at firstname.lastname@example.org
To contact the editor responsible for this story: S. Ali Sartipzadeh at email@example.com
Copyright © 2018 Tax Management Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)