Luncheon Remarks: 2019 AAA Auditing Section Midyear Meeting

Friday, January 18, 2019

Cindy Fornelli
Executive Director
Center for Audit Quality

January 18, 2019
Nashville, TN

As prepared for delivery

Hello, everyone, and thank you.

It’s an incredible honor to receive this award, which I gladly and proudly accept.

An extraordinary chapter of my life—more than 12 years in and around the public company auditing profession—is coming to a close. So to receive an accolade such as this, from such a respected body, means a great deal to me.

As I accept this honor, I understand that it is not—and could not be—simply the product of my own talent or efforts. My name might be on this plaque, but without the work of others, this award simply would not have happened.

First, I have to credit the CAQ’s Governing Board, who from the get-go knew that a robust, constructive relationship with academia was essential for the public company auditing profession. They made strengthening that relationship a top priority, and over the years that commitment has never waned. That will continue under the new executive director, whomever that may be.

I also have to thank my colleagues at the CAQ, who work so hard to build bridges, not just with academia but with a range of groups across our systems of financial reporting and investor protection.

Two of those colleagues are here with me today: Margot Cella and Lauren Tuite, who works closely with Margot.

Margot, you have been an outstanding teammate for over a decade, and your contributions to the work we have done to forge ties between the academy and the profession have been important and valuable. It gives me great comfort to know that you will continue that after I retire.

Finally, I have to credit the members of the Executive Committee of the Auditing Section itself, which over the years has been an excellent partner for the CAQ.

As I see it, our work with the American Accounting Association (AAA) is a great example of what I believe is one of the most important lessons that I’ve learned over the course of my career. It’s a lesson that I’d like to take a few moments to reflect on with you today.

If I had to distill this wisdom down to one line, it would be the following:

Working together, we gain strength and confidence.

Now that may sound like simple common sense, but why is it so true? Why are we stronger and more confident when we work together?

In the public company auditing profession, we know why. That’s because our profession is not an island unto itself. Rather, it is an integral part of numerous systems, notably our systems of financial reporting and of investor protection.

And so a collaborative mindset is critical. When you’re part of a system, you have to work with others—and you have to work well with them.

At the CAQ, we live by this collaborative approach. In fact, you could say it defines us. From our earliest days, we have taken a systemic, holistic approach to enhancing audit quality.

Over the next few minutes, I’d like to provide you with a closer look at how the spirit of collaboration has infused, informed, and structured our engagement with the academic community. Because I believe we have been on the right path, and it is a path the CAQ will continue to follow.

First, the profession’s collaboration with academia has meant supporting academia.

The CAQ has a three-pronged mission, and the first of those is this: Fostering high-quality performance by public company auditors. That fostering process happens in many ways, and support for independent research is one of them.

Since our earliest days, we have funded research via our Research Advisory Board (RAB), which brings together academics and practitioners.

This past June, the RAB announced four new grants, including projects on professional skepticism, auditor use of artificial intelligence, data analytics, and the effect of disclosure of critical audit matters on auditor judgment.

With the four new grants, the total number of RAB grants awarded over the years has grown to 39. Fourteen of those projects have been published in peer-reviewed journals, including a bumper crop of five last year.

Now, our support for academia, doesn’t just come in the form of dollars. We have been delighted to partner with the Auditing Section on our Access to Audit Personnel Program.

Since 2013, this program has connected academics with audit practitioners who can participate in research projects. Since the program’s inception, it has supported 22 research projects, providing academics access to nearly 5,000 practitioners.

These are some impressive numbers, don’t you think? But the story of our collaborative spirit doesn’t end there.

The profession’s collaboration with academia also means spurring dialogue.

The Midyear Meeting we are attending today, of course, embodies the power of dialogue. I can say this with certainty because I have had the honor of moderating panel discussions here for over 10 years. I was amazed to learn from Margot that this morning I moderated my 22nd AAA panel.

Sharing perspective, as we do at this event, can drive change and improvement.

And that notion was also the impetus behind the establishment of the CAQ’s signature conference: our Annual Symposium, which we first held in 2008. At that point, the CAQ was still very much in its infancy, and we weren’t quite sure our event would be a winner.

Well, happily, it was.

At that very first annual Symposium, one of our academic guests observed that in his 13 years of teaching, he had never been in a meeting with so many audit partners from different firms.

Since then, the Symposium has remained a success. It too has generated extraordinary conversation, and it has sparked new initiatives. We are already planning the 2019 Symposium in San Francisco in August.

Our 2018 Symposium, held in Washington alongside the AAA’s Annual Meeting, featured excellent panel discussions on navigating the challenges of new accounting standards, as well the evolving needs for the audit of 2023.

And, speaking of 2023, let me offer a final point.

The profession’s collaboration with academia means looking to the future.

Don’t get me wrong—we need to study our past to plan for the future. I’m a big fan of historians!

But a key pillar of our engagement with academia has been to focus on ensuring the future vibrancy of accounting and auditing. This focus on the future takes many forms.

For example, we at the CAQ have been a strong supporter of Accounting Doctoral Scholar (ADS) program. In fact, at this conference, as at past Midyear meetings, we hosted another ADS breakfast bringing together scholars, audit partners, and university relations professionals from the firms. The original cohort of ADS students who entered their PhD programs in Fall 2009 are going up for tenure and/or have already achieved that goal. And a new crop of ADS scholars, which we refer to as “ADS 2.0,” began entering PhD programs in the fall of 2017.

But our focus on the future goes beyond today’s PhD students—we’re also reaching out to college students and high schoolers, and collaboration is key in those efforts.

One of the CAQ’s biggest accomplishments in the past dozen years has been the creation of the annual #AuditorProud social media blitz.

This year’s blitz, which took place on September 27th, resulted in thousands of people posting #AuditorProud messages in 103 countries and 387 cities.

At the high school level, we’ve also advanced our Passport to Audit Program, which we conduct in partnership with the National Academy Foundation.

The program advances diversity by sharing the auditing story with groups of people who may still be underrepresented in the profession.

At Passport to Audit events, high school students spend a full day at a public accounting firm. They learn about the work of auditors and the many career options available to those who study accounting, which of course includes a career in academia.

In 2018, Passport to Audit expanded from a pilot stage to nearly 40 events at leading audit firms across the country. We are still very much in the early stages in this initiative, but our progress is steady and tangible. And I am pleased to announce that we are expanding this program to community colleges.

My few minutes are up. So let me quickly recap.

My CAQ colleagues and I believe that when we work together, we gain strength and confidence. That’s why the auditing profession’s engagement with academia is infused with a collaborative spirit.

As I’ve just discussed, this spirit plays out in three key aspects: support for independent research, dialogue with academics, and a focus on the future.

In my mind, these three elements form a structure that the profession and the academic community can work on together long after I have stepped down as the Executive Director of the CAQ.

It is a structure that is built to last, and I look forward to watching it grow and develop.

Thank you again for this award, thank you to the Auditing Section for another excellent conference.