CPAs Can Play Key Role in Addressing Cybersecurity Risk
The auditing profession can help companies and capital markets address growing challenges of cybersecurity, according to a new white paper from the Center for Audit Quality (CAQ). The paper, The CPA's Role in Addressing Cybersecurity Risk, highlights the strengths that audit firms can bring to bear for the benefit of senior management, boards of directors, and other key capital markets stakeholders.
The CAQ paper explores the challenging cybersecurity landscape, one in which organizations face varying cyber-threats and impacts—all in an environment marked by rapid technological change. What’s more, various stakeholders increasingly must gather information and communicate about cybersecurity.
In addressing these and other cybersecurity challenges, the CPA profession brings a long history of strong values, as well as decades of experience in auditing information technology controls and providing independent assessments in the areas of financial statements and internal control over financial reporting. As explored in the white paper, CPAs are able to provide new business services with the development of a cybersecurity reporting framework from the American Institute of CPAs.
“Cybersecurity challenges are stark, and they demand that every sector of the economy play a role,” said CAQ Executive Director Cindy Fornelli. "The public company auditing profession will do its part by leveraging its traditional strengths while innovating in ways that can greatly enhance confidence in cybersecurity information and practices."
Investor Advocates Join CAQ in Calls to Preserve a Key Provision of the Sarbanes-Oxley Act
In a joint letter to House Financial Services Committee leadership, the CAQ, Council of Institutional Investors, and CFA Institute expressed shared opposition to any legislation that would erode Section 404(b) of the Sarbanes Oxley-Act (SOX) or that would revise the definition of accelerated filer as defined in Securities Exchange Act of 1934.
The letter outlines the many benefits for companies that meet the current definition. These benefits include enhanced investor and market confidence in financial information and lower cost of capital.
The letter also cites recent surveys that were conducted separately by independent research firms on behalf of the CAQ. They revealed that 74 percent of certified financial advisors and 85 percent of public company CFOs support important investor protection provisions in SOX. Eighty-two percent of financial advisors and 79 percent of CFOs say SOX, which 15 years ago established a wide range of measures to strengthen financial reporting, has improved the reliability of financial information.
CAQ Issues Planning Alert for Auditors of Brokers and Dealers
In May, the CAQ released Audit Planning Alert for the 2017 Audit Cycle for Brokers and Dealers. Presenting sets of key questions and considerations for auditors, the alert focuses on certain complex areas of both the audit and attestation engagements. The alert also provides common examples of audit deficiencies that the Public Company Accounting Oversight Board has described in its Annual Report on the Interim Inspection Program Related to Audits of Brokers and Dealers.
CAQ Congratulates Clayton on Confirmation as SEC Chair
On May 2, 2017, the US Senate confirmed the nomination of Jay Clayton as Chairman of the Securities and Exchange Commission. “The CAQ congratulates Jay Clayton on his confirmation," said CAQ Executive Director Cindy Fornelli in a statement following the vote. "Investors have shown strong and enduring confidence in US capital markets, thanks in good part to the SEC's crucial role in capital formation, market oversight, and investor protection. We look forward to building on that strength as we work with Mr. Clayton toward our shared goal of enhancing investor confidence and public trust in our capital markets."
2017 Research Grants Unveiled
Furthering its commitment to independent auditing-related research, the CAQ in May announced grant awards from its two flagship research programs. First, the CAQ and the Auditing Section of the American Accounting Association announced three awards for the Access to Audit Personnel Program, which connects academics with audit practitioners to participate in projects conducted by researchers. This year's awardees will have access to 400 audit staff and managers at CAQ Governing Board firms.
“The Access to Audit Personnel program has been very successful in connecting scholars with audit professionals,” said Karla Johnstone, Professor at the University of Wisconsin – Madison School of Business and President of the AAA Auditing Section. “Gaining access to personnel from the audit profession can be one of the greatest challenges of academic research. With the help of the CAQ, we’re pleased to help professors work with study participants from some of the country’s most prestigious audit firms.”
Separately, the CAQ’s Research Advisory Board, comprised of members from academia and the auditing profession, selected five projects on the following topics: the auditors’ consideration of evidence for complex estimates, auditing non-GAAP measures, auditor use of root cause analysis and its effect on skepticism, and skepticism among senior auditors.
Passport to Audit Program Gets Underway with Events in Baltimore and Miami
Nearly 200 high school students in Baltimore and Miami took part in April and May sessions of the CAQ led "Passport to Audit” pilot program. The CAQ and its Governing Board member firms hosted students from select schools of the National Academy Foundation (a national network of education, business, and community leaders who work together to ensure high school students from high-needs communities are college, career, and future ready) with the goal of educating students on a career in public company auditing.
At Passport to Audit events, students spend a day at a public accounting firm learning about the profession, what auditors do, and the many career options available to those who study accounting in college. Through games, mock inventory counts, panel discussions, and office tours, the students have a chance to experience the world of audit and gain a true perspective on what it means to be a public company auditor.
To learn more about the CAQ’s talent initiatives, including development of resources for high school and college students, visit www.discoveraudit.org.
Brian Anderson Talks Audit Quality and More on "Profession in Focus"
Episode 45 of "Profession in Focus" features CAQ Governing Board Member Brian P. Anderson. A director at W. W. Grainger Inc., PulteGroup, and James Hardie Industries plc, Anderson discusses the state of audit quality, the "journey" of diversity, and the importance of robust communication between boards and shareholders.
Drawing on his own experience, Anderson also offers insights on why auditing is one of the best ways to prepare for a successful career. "Public accounting is the best place to gain significant leadership experience…to enhance your teamwork skills, and really just learn to get things done in an organized manner," he says.
Commentary: The Driving Force Behind Public Company Auditing's Bright Future
What driving force will help propel public company auditing profession's success in the years to come? As discussed by CAQ Executive Director Cindy Fornelli in this May 2017 LinkedIn Influencer post, it will be "the beating heart of auditing: building confidence and trust."
"Our economy can't function if companies, boards of directors, investors, and others don't have confidence in information," Fornelli writes. "The auditor's core objective is to provide that confidence." Beyond the financial statement audit, Fornelli points to several emerging areas where companies will need to nurture trust—and where auditors can play a role. These areas include cybersecurity, sustainability, supply chain controls, and the use of non-GAAP financial measures.
Join the CAQ at These Upcoming Events
CReCER Regional Conference
Cindy Fornelli will moderate a panel at the 10th Annual CReCER Conference. Her panel, “Fostering Trust: The Role and Tools of the Profession,” will feature Stavros Thomadakis, Chairman of the International Ethics Standards Board for Accountants; José Raúl González Lima, Director of Corporate Financial Reporting at the Grupo Televisa S.A.B; Mercedes de Freitas, Board Member at Transparency International; and Idesio Coelho, President of IBRACON, Board Member at IFAC and South America Regulatory Matters and Brazil Risk Management Leader at Ernst & Young.
June 6-9, 2017; Mexico City, Mexico (Website)
National Association of Colleges and Employers Conference
The CAQ is looking forward to the 2017 NACE Conference in Las Vegas! Stop by booth #503 to learn more about the new resources on our DiscoverAudit.org website and why auditing is an exciting and fulfilling career that students should consider.
June 6-9, 2017; Las Vegas, NV (Website)
National Association of Corporate Directors Cyber Summit
The CAQ is pleased to partner with the NACD for its 2017 Cyber Summit, where Cindy Fornelli will interview cyber security expert, Melissa Hathaway. Registration is open!
June 21, 2017; Chicago, IL (Website)
American School Counselor Association Conference
The CAQ is excited for the 2017 ASCA Conference in Denver! Stop by booth #221 to learn more about resources on DiscoverAudit.org and discover the opportunities the audit profession has for bright students.
July 8-11, 2017; Denver, CO (Website)
Anti-Fraud Collaboration Webcast: When Accounting Policy Meets ICFR
Join the Anti-Fraud Collaboration for a webcast discussion with Brian T. Croteau, Partner at PwC, LLP; R. Karl Erhardt, Executive Vice President and Chief Auditor at MetLife; Suzanne Hopgood, President and CEO at The Hopgood Group; Linda Zukauckas, EVP, Corporate Controller at American Express; and moderator Cindy Fornelli on the topic of “What is Your Role? When Accounting Policy Meets ICFR.”
July 11, 2017 (Register Here)
American Accounting Association Annual Meeting
Join the CAQ at the AAA Annual Meeting in San Diego, where Cindy Fornelli will moderate a panel discussion with Jeanette Franzel, Board Member at the PCAOB; Maria Moats, Assurance Leader at PwC, LLP; and Chris Smith, Global Head of Audit and Accounting at BDO on the topic of “Materiality – Do We Know It When We See It?” on Monday, August 7. And stop by booth #23 in the Exhibit Hall to learn more about DiscoverAudit.org.
August 6-8, 2017; San Diego, CA (Website)