More good stuff for auditors – 7-26-13

More good stuff for auditors.  A few links with comments –

CPA-Scribo – Objections to FRF for SMEs– NASBA thinks FRF-SMEs are a bad idea and shouldn’t be used. Charles Hall wonders what makes FRF-SMEs any different from cash basis, tax basis, and modified cash basis, all of which have been used for decades.

As for the idea of “unenforceable”, doesn’t that same idea apply to all OCBOA?

Chicago Booth School of Business Do audit firms care about reputation? – Francine McKenna believes the answer is “no” for the Big 4.

Bankers, and the audit firms that support them, aren’t worried about reputation because no one that matters to them is

I’m sure left shaking my head in confusion after pondering the recurring problems in the Big 4.

Bloomberg – Standard & Poor’s and an Awful Legal Defense – Jonathan Weil illustrates the front-page-of-the-newspaper-test by pointing out the S&P defense against the Justice department accusing it of fraud is to say the S&P ratings are merely opinion, just “puffery”, and

that a reasonable investor wouldn’t depend on them. 

Mr. Weil closes his article by mentioning the newspaper test and that S&P should have thought about that.

Yes, it is a very bad thing to see on the front page of the paper say your defense against a fraud charge is to say your business model is a fraud.

Re:Balance – Should Audit Reports Name the Lead Partner? I Asked Joe Btfsplk, CPA – Jim Peterson repeats his point that naming the lead partner won’t do much (if any) good. He does say disclosing the entire partner team might help. Francine McKenna comments that her point has long been to disclosure the entire partner team.

Jim makes the point that getting tangled up on one audit fiasco is sufficient to be a career inhibitor because the firms themselves monitor who causes disasters.

Pittsburg Tribune-Review – Former worker charged with stealing $700K from healthcare nonprofit – Financial Services Manager pled guilty to 12 charges and will be sentenced October 23. Scheme was diversion – he deposited checks payable to the organization into an account he opened in 2007. Motivation was gambling – the money was spent at casinos.

Re:Balance – Mandatory Auditor Rotation – HR 1565’s Bump in the Road to Nowhere – In addition to auditor rotation being harmful & ineffective and also having zero chance of going anywhere anyway, the bill to prohibit PCAOB from requiring rotation is an idiot’s tale. Jim Peterson also thinks the bill is silly and stupid. His words, not mine.

No disagreement from me. I still wonder how the good professor really feels.

Capital Ideas – The Big Four balancing act– Francine McKenna surveys the systemic risks of too much concentration of audit providers.

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