Washington, DC – The Center for Audit Quality (CAQ) today released a report summarizing its recent workshop on the evolving role of the public company auditor.
More than 30 workshop participants gathered in New York on March 12 to consider how the public company auditor’s role might change to meet the needs of investors. Over half of the workshop participants were investors and buy-side analysts; the remainder was a mix of audit committee members, preparers, auditors and others.
The workshop was built upon discussions in a series of CAQ roundtables held with a range of stakeholders over the course of 2011 that began a dialogue about the evolving role of the public company auditor (a summary of those roundtables can be found here). Workshop participants explored key questions that had been flagged at the roundtables, including the benefits of auditor involvement with financial information disclosed by management outside of the audited financial statements; specifically, Management’s Discussion and Analysis (MD&A), earnings releases, and key performance indicators (KPIs).
Workshop observations include:
- Non-GAAP disclosures are important to investors’ decision making processes, although audited financial statements provide a baseline;
- More consistency and comparability is warranted in the use of KPIs in MD&A and earnings releases;
- Investors want to hear directly from management; auditor involvement with information outside the financial statements could add an unwanted “filter”; and
- Some investors would like to see a requirement that the auditor read and discuss the earnings release with the audit committee.
“We hope to advance further consideration of these issues by all interested parties through publication of this workshop summary and through continued dialogue with stakeholders and policy makers,” said CAQ Executive Director Cindy Fornelli. “It is vitally important that investors understand and continue to trust the work that auditors perform – and have confidence in our financial reporting system and the checks and balances that underly the system.”
The Summary of Workshop on the Evolving Role of the Auditor is available for free.
# # #
The Center for Audit Quality (CAQ) is an autonomous public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets. The CAQ fosters high quality performance by public company auditors, convenes and collaborates with other stakeholders to advance the discussion of critical issues requiring action and intervention, and advocates policies and standards that promote public company auditors’ objectivity, effectiveness and responsiveness to dynamic market conditions. Based in Washington, D.C., the CAQ is affiliated with the American Institute of Certified Public Accountants. For more information, visit www.thecaq.org.