Comments on: Auditing Standard 5: How Now, Brown Cow?

By: re: The Auditors » Blog Archive » Sarbanes-Oxley Insights: An Interview With Bob Hirth of Protiviti

Thu, 28 Jan 2010 19:03:39 +0000

[...] do you see as having a greater impact on the reduction of costs associated with Section 404 – AS5 or general economic conditions and backlash on perceived fee gouging that has shifted power back [...]

By: re: The Auditors » Blog Archive » So Much Auditor Litigation Makes For Strange Bedfellows

Tue, 29 Dec 2009 16:49:48 +0000

[...] for identifying fraud risk at their clients and acting on it, I see it as bigger than that. The audit firms already have a responsibility to identify risk of fraud and adjust their audit procedures accordingly, assuming those procedures will uncover the fraud if [...]

By: pcaob-

pcaob- — Mon, 12 Oct 2009 23:52:59 +0000

No matter what the firms do, the PCAOB will always have comments. They need to have comments in order to justify their existence and their $200k+ salaries while working 4 days a week with no risk (no capital loans, no sales targets, no need to provide client service, etc) They can talk about audit theory and making judgments which they themselves have never had to make. It is alot easier to sit back and 6 months later say all the things someone should have done and documented, it is alot harder to be the guy/girl doing that in the middle of the audit.

#1 above is correct- You can audit why the sky is blue, but they expect you to document why the sky is not green, orange, red and purple. It doesn’t make a lot of sense..

By: Ex-dr

Ex-dr — Mon, 12 Oct 2009 01:08:17 +0000

I agree with a lot of your comments here – particularly this one:
It’s not easy to apply judgment or use experience and industry, global or general economic knowledge when you’re a 24-year-old second-year associate and you’ve never met the engagement partner or any subject matter expert.

Keeping up with new rules and regulations has almost become a full time job in itself.

@4: when I was at college (over 10 years ago) it was taught that the audit role was not to detect fraud, and the public perception gap was part of the official syllabus. Times change…..

By: Re: Moral Discipline, by Elder Christofferson « Irresistible (Dis)Grace

Re: Moral Discipline, by Elder Christofferson « Irresistible (Dis)Grace — Sat, 10 Oct 2009 17:13:39 +0000

[...] hold on! Let’s remember something about history. Auditors didn’t even always test for internal controls…and until the big scandals, they didn’t even believe they had a responsibility to [...]

By: Anonymous

Anonymous — Thu, 08 Oct 2009 00:36:21 +0000

Ugh! As an outsourcer, am dealing with a Big4, who’s been a repeat auditor at a public client. This Big4 has been there a number of years, with the same staff, seniors, manager. This Big4 is backed into an uncomfortable corner, b/c we have findings which indicate violations of very basic controls, especially ones mentioned in the article. These violations have likely been going on for a while, i.e. at least 1-2 years, even 3. This Big4 was extremely surprised at these findings, as it indicates a methodology or thought process they had not considered, despite auditing them for years.

How come this Big4 did not find these basic violations, while us outsourcers did? (Remember, we have access to the same client staff, management and information. This information is extremely basic, was not difficult to get a hold of, or to analyze) This Big4 has indicated that they did all their own testing and rarely relied on outsiders’ testing in the past, so what did this Big4 do, since these violations have been going on for a while? How has this Big4 justified the clean opinions they’ve been issuing? How do they justify their extra hours to the client? Us outsourcers have been able to present these findings using 1/2 the resources, with personnel that have half the client experience and half the public accounting experience that the involved Big4 personnel have, and at a lower rate.

By: Anonymous

Anonymous — Wed, 07 Oct 2009 18:07:43 +0000

@1,

Are the same things your clients saying about you as their auditor?

By: not a fan of PCAOB

not a fan of PCAOB — Wed, 07 Oct 2009 11:02:56 +0000

Having gone through two inspections over the last couple of years, I have first hand experience with the PCAOB inspectors and found the following:

1.While the PCAOB say they allow for professional judgment, they expect every single thought process to be documented, so e.g. when scoping multi locations, you can’t just say as locations xyz are not material and have no operations, we considered the qualitative and quantitative factors and determined that in our professional judgment, we do not need to visit those locations. The PCAOB expect you to document everything you considered, not just the general terms AND have also done work to support your considerations. So effectively go audit the location you are not going to audit to determine you do not have to audit that location! Sounds mad I know but….

2.The PCAOB are so clearly out of touch with reality. With that I mean the environment in which we work, client service and related deadlines. So the PCAOB show up in the summer to inspect an engagement within one week. They work federal hours of 9-5 and don’t always understand the client’s business. They then question judgments made by the team based on experience and knowledge of the client’s business and are also made after working 80 hours a week!

3.As with any audit team, it is a crapshoot, some inspectors are more tenacious than others, some are better than others and some are just a@@holes!