Accounting And Auditing

A Push for Audit Quality Could Send Costs Higher

Tammy Whitehouse May 15, 2012

After several large audit firms scored poor marks on their most recent round of audit inspections, many are responding by stepping up their game. They are investing more in training and staff, and planning on giving problem areas more scrutiny—all of which could drive costs higher. "We are doing a number of things differently," says Robert Moritz, chairman of PwC's U.S. operations. More inside.

PCAOB Contemplates Its Next Move on Improving Audit Quality

Tammy Whitehouse May 08, 2012

The Public Company Accounting Oversight Board may be cooling on its idea of mandatory audit rotation, but don't expect it to walk away from the idea of putting new measures in place to improve audit quality, including strengthening the role of the audit committee. "We're all anxiously awaiting exactly what they'll decide to do," says James Comito, a shareholder at audit firm Mayer Hoffman McCann.

Remaking Internal Audit to Focus More on Strategic Risks

Tammy Whitehouse April 10, 2012

Once upon a time, internal audit departments were busy enough with reviewing financial statements and Sarbanes-Oxley compliance. But as company risks have exploded in recent years, the modern audit department has had to reconfigure its skills and priorities to match. The emerging result: audit departments pressured to understand what drives the business and to build deeper relationships with top managers. More inside.

The Inexact Science of Making Sound, Defensible Business Judgments

Tammy Whitehouse March 13, 2012

Since 2008 executives have urged the SEC and others to consider issuing guidance to the capital markets to explain how regulators assess the reasonableness of business judgments, but those calls have gone unheeded. Now the Committee of Sponsoring Organizations has stepped forward with guidelines of its own on the topic. Details inside.

PCAOB Calls for More Scrutiny of Related-Party Transactions

Tammy Whitehouse March 06, 2012

Auditors are getting new pressure to sniff out business deals with insiders and to probe unusual transactions, including executive compensation deals, that might suggest something could be amiss. "There's a fair degree of push here to drill down further into compensation structures for executives," says Michael Scanlon, a partner with law firm Gibson, Dunn & Crutcher. More details inside.

PCAOB Action Illuminates Returns Accounting

Tammy Whitehouse February 28, 2012

A recent disciplinary action against Ernst & Young provides a lesson for corporate accounting executives and auditors alike on how not to push accounting logic to improve reported financial results. The case centers on Medicis Pharmaceuticals' accounting for returned products, an area of accounting that relies heavily on judgment—which Medicis took too far, and ended up with a restatement. Details inside.

SEC Calls for More Uniform Disclosure of European Debt Exposure

Tammy Whitehouse February 14, 2012

The SEC is prodding companies to clarify how they report risks related to European debt, after reviews found lots of variance among disclosures. It also wants companies to report exposure exceeding 1 percent of total assets, far lower than the typical 5 percent threshold. "It could be that the SEC doesn't want to be tainted if something bad happens," says David Larsen, a managing director at Duff & Phelps.

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