Volume 4, Issue 3

March 2010

I. CAQ Reacts to SEC’s IFRS Plan

The U.S. Securities and Exchange Commission (SEC) on February 24 voted unanimously to issue a statement supporting the adoption of international financial reporting standards (IFRS) for U.S. issuers.

"For nearly 30 years, the Commission has promoted a single set of high-quality globally accepted accounting standards, which would advance the dual goals of improving financial reporting within the U.S. and reducing country-by-country disparities in financial reporting," Chairman Mary Schapiro said. "But supporting this goal is only the beginning of the discussion, not the end."

Center for Audit Quality (CAQ) Executive Director Cindy Fornelli said the profession was pleased that the SEC reiterated its support for a single set of high-quality global accounting standards, consistent with comments from the vast majority of investors and other stakeholders who reacted to the Commission’s Roadmap. “We are also pleased that the SEC has expressed its support for IFRS as that single set of high-quality standards,” she stated. “The SEC’s action, in conjunction with the staff’s forthcoming Work Plan, should provide a path forward to the incorporation of IFRS into the financial reporting system for U.S. issuers. We encourage the Commission to execute its action plan so it is in a position next year to make a positive decision to adopt IFRS.”

Fornelli added, "The CAQ is committed to working with the SEC staff as it carries out its Work Plan. We recognize the importance of preparers, investors and standard-setters working together to help move this important initiative forward, and we will continue efforts to assist stakeholders, including investors, in understanding the benefits of IFRS.”

II. CAQ Submits Comment Letter on PCAOB’s Reproposed Risk Assessment Auditing Standards

In a March 2 comment letter in response to the PCAOB’s Request for Public Comment Regarding Proposed Auditing Standards Related to the Auditor’s Assessment of and Response to Risk, the CAQ said it appreciates the Board’s consideration of the feedback from stakeholders on its original proposal and believes that the reproposed standards are significantly improved in a number of areas.

“Identifying, assessing and responding to risks are integral to the audit process and fundamental to the conduct of high quality audits. We concur with the Board that risk assessment should underlie the entire audit process and result in appropriate audit procedures that are tailored to a company’s facts and circumstances, including its size and complexity. As set out in our previous comment letter, we are supportive of efforts to improve auditors’ assessment of and response to risks,” Cindy Fornelli wrote.

However, the comment letter noted a number of areas where the CAQ believes the proposal could be enhanced and suggested improvements to the transparency of the PCAOB’s standard-setting process. “While we commend the PCAOB for these measures, we request the Board consider further enhancements to its standards-setting process that would provide additional visibility to the Board’s rationale and expectations for changes to practice,” Fornelli stated.

III. CAQ Featured on Maryland Association of CPAs Podcast

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

The Maryland Association of CPAs’ (MACPA) Bill Sheridan believes the argument can be made. In a March 8 blog post, Sheridan wrote that, “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."

Sheridan’s “CPA Success” blog called attention to his 20-minute podcast interview with Cindy Fornelli, in which she discussed the CAQ’s history, role and public policy presence in our nation’s capital. Fornelli also noted that seven CAQ member firms and five associate members are based in Maryland.

With a membership of nearly 10,000, the MACPA is the largest professional organization serving the exclusive needs of Maryland CPAs.