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CAQ Snapshot: July 2016

Saturday, July 2, 2016

Fornelli: Time to “Squash the Confusion” around Careers in Auditing

Misperceptions lurk around what it means to be an auditor, writes CAQ Executive Director Cindy Fornelli in a July LinkedIn Influencer post. “We need to shed more light on what auditors do and on the fact that auditing can be a path to a dynamic and rewarding career,” she says.

Fornelli discusses several ways in which the auditing profession is addressing that need, including a new video montage of the day-to-day lives of young audit professionals, as well as a new set of real-life illustrations of how careers in auditing can unfold over the longer term—from new hire to partner.

She also flags the forthcoming #AuditorProud social media “blitz,” scheduled for September 22, 2016. Led by the CAQ and its member firms, last year’s #AuditorProud day produced a global outpouring of tens of thousands of messages, updates, blog posts, and videos on why auditing is an exciting, rewarding career. “We expect it to be even bigger this time around,” Fornelli adds.

CAQ Comments on Financial Disclosure, Post-Implementation Review of Auditing Standards

In July, the CAQ weighed in on key issues before Washington regulators. In a comment letter submitted to the Public Company Accounting Oversight Board (PCAOB), the CAQ expressed its support for the PCAOB program under which the staff of the PCAOB Center for Economic Analysis conducts post-implementation reviews of PCAOB rules and standards.

“We believe this will be a valuable addition to the Board’s due process for standard setting,” said the letter, “as it could allow the Board to determine if any clarifications, implementations, or more general guidance are needed to supplement its standards.” The CAQ also encouraged the staff of the PCAOB Center for Economic Analysis to establish and publish a post-implementation review agenda, similar to the Office of the Chief Auditor’s standard-setting agenda.

Separately, the CAQ provided profession views to the U.S. Securities and Exchange Commission (SEC) regarding the Commission’s concept release on business and financial disclosure required by Regulation S-K. In its letter, the CAQ notes the public company auditing profession’s strong interest in the success of the SEC’s Disclosure Effectiveness Initiative. In the CAQ’s view, a principles-based disclosure regime, supplemented with guidance or considerations on how to apply the principles, will promote the disclosure of meaningful and relevant information.

“We also support a disclosure regime that can be consistently applied to all registrants,” the CAQ added. “Different reporting requirements for differently-sized registrants may result in unnecessary confusion and complexity in the disclosure framework.”

“Profession in Focus” Features Pitt, Brown

In July, the CAQ added two new episodes to its “Profession in Focus” video series. The first features Harvey L. Pitt, Chief Executive Officer and Managing Director at Kalorama Partners. There are many ways to improve the quality of audits and make better use of technology, says Pitt, a former SEC Chairman. In particular, technology could be used to enhance financial reporting, which, in his view, “is still back in the parchment and quill pen era.”

In the subsequent episode, CAQ Governing Board member Jeffrey Brown, Professor of Business and Dean of the College of Business at the University of Illinois at Urbana-Champaign, discusses the importance to any organization of getting independent perspective and the value of interaction between academic researchers and professionals. On the latter, he says that “any time that we can get industry and academics together—just in the same room to talk to each other—that in and of itself is enormously valuable.”

Created in 2015, “Profession in Focus” presents interviews with thought leaders from the auditing profession and other important constituents with a connection to the financial reporting process. The full series can be found at the CAQ’s website and its YouTube channel.

Anti-Fraud Webcast Covers Short-Termism

Over 1,700 people tuned in to a July 7 Anti-Fraud Collaboration webcast, “Coming to Terms with Short-Termism: Implications for Fraud.” In the webcast, a panel of experts discussed what successful companies do to reinforce the alignment between potentially conflicting long- and short-term goals. They also provided actionable recommendations that each supply chain member can implement in their organizations. An archived version of the webcast can be found on the Anti-Fraud Collaboration website, CAQ’s YouTube channel, and the Webcasts page of the CAQ website.