Audit quality: More important than ever?

Is the role of the auditor more important today than at any other time in recent memory?

I think the argument can be made. Wall Street is under scrutiny, the government has been doling out money left and right to shore up the economy, but where's the transparency? Where's the accountability? Those buzzwords are being tossed around with abandon these days, but auditing, done right, can provide those things and form an important link between a financial report and all of its audiences -- investors, regulators, issuers, educators, the financial press, and yes, the auditors themselves.

And that's where the Center for Audit Quality comes in.

The CAQ was founded in January 2007 with a very broad mission of enhancing investor confidence and public trust in the global capital markets. It does that in a number of ways, most importantly by working to improve the performance of public company auditors.

I spent some time on the phone recently with CAQ Executive Director Cindy Fornelli, and she offered some insight into the Center's work and its mission ... and into the issues that are impacting auditors today. Among those issues:

• Independent standard setting: "There (has been) a real call to try to dilute how accounting and auditing standards are set and to try to give others who had different uses for accounting a voice in the accounting standards setting process," Fornelli said. "We felt that would have harmed the marketplace, because investors want to be able to rely on those standards and that they are set through an independent process that's free of undue external pressures."
  
  
• IFRS: "Over 100 countries are either using or moving toward using IFRS, and the United States needs to think long and hard about how to get to that place as well," Fornelli said. "My fear is if we don't move toward a plan toward adopting IFRS, we will be seen as isolationist and a lone wolf. It behooves all of us -- investors, preparers, CPAs and academics -- to think about how the U.S. can get to a place where we are comfortable with adopting a single set of high-quality global accounting standards."
  
  
• Liability: "We all know our unique liability structure brings certain challenges to the profession," Fornelli said. The CAQ, she said, hopes to play a role in "recognizing that catastrophic liability can pose a significant risk to investors and, as some of these issues are debated in Congress, making sure that auditors and CPAs have a voice there as well."

Listen to more of Fornelli's thoughts in this CPA Spotlight podcast.

• Subscribe to our podcast here, or search for "CPA Spotlight" in either iTunes or Zune.

Tell us what you think: How has the auditor's role changed in the wake of the financial crisis? And while you're thinking, check out these related MACPA programs:

• May 3: Auditing Bits in Bytes, Session 1: Pre-Engagement Planning Activities
• May 10: Auditing Bits in Bytes, Session 2: Preliminary Planning Activities
• May 17: Auditing Bits in Bytes, Session 3: Internal Control Considerations
• May 24: Auditing Bits in Bytes, Session 4: Assessing and Responding to Risk
• June 7: Auditing Bits in Bytes, Session 5: Substantive Testing
• June 14: Auditing Bits in Bytes, Session 6: Engagement Wrap-Up
• June 21: Auditing Bits in Bytes, Session 7: Identifying, Evaluating and Communicating Internal Control Deficiencies
• June 28: Auditing Bits in Bytes, Session 8: Quality Control Considerations
• May 28: Audits of 401(k) Plans
• June 9: Nonprofit Auditing and Accounting Update

Comments

[SAS 70 Audit]

Couldn't agree more about having a high quality audit. We see so many SAS 70 companies doing audits purely online. The quality cannot be trusted like a real CPA firm.