Audit News Briefing: 24 December 2015

Audit-is-cool is pleased to accumulate and provide its readers with the news on audit and related topics:

December 16, 2015

Reuters - dailymail.co.uk

Accounting firms, SEC hobble U.S. audit watchdog

"U.S. rule-making is a complex process that involves people with many different perspectives who care deeply about the issues… I think this is the case with the PCAOB and SEC in the work we do together, including proposals to give more information to investors about who is leading the audits of the companies in which they invest." This is what PCAOB chief Doty said in a written statement during the annual accounting-industry gala. James Schnurr, who is just two months into his job as chief accountant at U.S. SEC also addressed auditing failures that had shaken public confidence in recent years. Investigative journalist Charles Levinson enumerated all exchanges of thoughts and surrounding events of this so-called hobble.

Please follow link for details: http://www.dailymail.co.uk/wires/reuters/article-3362563/Accounting-firms-SEC-hobble-U-S-audit-watchdog.html

December 15, 2015

The Wall Street Journal

Regulator Approves Naming of Audit-Firm Partners in Charge of Corporate Audits

Under the long policy aim to make auditors more accountable – Beginning with audits performed in 2017, audit firms will have to name their “engagement partner” in charge of each audit in a new form to be filed with the Public Company Accounting Oversight Board. The PCAOB voted unanimously last December 15 (Tuesday) to enact the proposal, which is still subject to Securities and Exchange Commission approval.

Please follow link for details: http://www.wsj.com/articles/regulator-approves-naming-of-audit-firm-partners-in-charge-of-corporate-audits-1450198985

December 10, 2015

Street Insider

SEC Suspends Five Public Accountants and Two Audit Firms for Bad Auditing

“Auditors must follow the professional standards and avoid conflicts of interest when they opine on the financial information reported by public companies… These accountants and their firms showed complete disregard for the basic rules of their profession. As a result, they are now barred from working on any SEC-related matters.”

This was the pronouncement of Director Paul G. Levenson of the SEC’s Boston Regional Office. The government regulator suspended five accountants and two audit firms from practicing or appearing before the SEC after they violated key rules that are designed to preserve the integrity of the financial reporting system.

According to the SEC’s orders finding violations by Peter Messineo and his firm Messineo & Co., Charles Klein and his firm DKM Certified Public Accountants, Robin Bigalke, Joseph Mohr, and Richard Confessore:

·         Messineo and his firm, which had more than 70 corporate clients, skipped mandatory quality reviews for their own audits and performed deficient quality reviews for audits by another audit firm.

·         To cover up these violations, Bigalke falsified and backdated audit documents in her role as Messineo & Co.’s senior accountant. She also arranged with Mohr, the firm’s quality reviewer, the backdating of quality review documents.

·         Mohr falsely identified himself as a certified public accountant during a time when was not licensed as a CPA.

·         Messineo served as the CFO of two public companies being audited by Klein and DKM. Messineo falsely certified the companies’ public filings despite knowing that auditor independence rules were being violated as Confessore was improperly serving conflicting roles as a member of the DKM audit team and an employee of Messineo & Co.

·         After Messineo resigned from his CFO positions at both public companies, he merged his audit firm into DKM and exacerbated DKM’s independence issues because he retained ownership interests in the two companies while DKM continued to audit them.

Please follow link for details: http://www.streetinsider.com/Litigation/SEC+Suspends+Five+Public+Accountants+and+Two+Audit+Firms+for+Bad+Auditing/11144504.html