If you are interested in audit, how could you tailor your interests and skills to fit the growing needs cited in the article?
Firms who are “heavy users” of non-GAAP (pro forma) earnings measures (“EBBS”) seem to have a higher propensity of accounting problems, resulting in accounting restatements. What might be the connection? If the relation between use of non-GAAP measures and accounting problems is established to be systematic, what do you propose as a solution?
What are some of the negative implications of the concentration of audit services in so few audit firms? Should anything be done about it? Why or why not?
Accounting errors, revisions, restatements are down over the past decade, but they still are nontrivial in many cases. How would you determine whether the issues cited are relevant to market participants?
If you were a the lead audit partner in charge of a corporate audit, would you mind being named as such in a new disclosure form from the PCAOB? Why or why not? Does is make any difference that this disclosure is not made part of a regulatory filing with the SEC?
If you were in charge of setting the audit fee for a client, what are all the factors you would want to consider? How would you assess the risk of a client, other than considering a weakness in internal controls?
So managers will be required to give early warning about whether their firm is a “going concern.” Do you believe this increased disclosure by managers is beneficial? For whom? Is it possible that such disclosures could become self-fulfilling? How so?
Do you believe that fewer accounting restatements means that the quality of financial reporting has improved? How would you define high quality financial statements?
What do you think about the proposal to mitigate the conflict of interest that auditors have since they are paid by the firms they audit? Do you think the experiment would transfer to world of auditing financial statements? Why or why not?
In your opinion, is it a good idea for the PCAOB to force the lead audit partner to reveal his identity on an audit engagement? Why? Who benefits from this information? How? Who is potentially hurt? What could be some of the consequences on the lead audit partner?
Congress compelled the PCAOB to back off the proposal to require auditor rotation. Why? Do you think Mr. Pozen’s idea of requiring a request for proposal (RFP) every 15 years is a good one? Why or why not? What problem is it supposed to address?
Why do you think the PCAOB wants to change the auditor’s report? Who would benefit from knowledge of the “critical audit matters”? How would they benefit? What are potential downsides to requiring auditors to report such information?
Have you ever read an audit opinion letter? If so, did you understand it? Do you know what “present fairly,” “reasonable assurance,” “material misstatements,” and other such phrases really mean? What do you think about re-doing the audit opinion letter in the way proposed? Would the proposal make the letter easier to understand or more useful?
Name one argument for and one against mandatory auditor rotation? What is your opinion: should firms be required to rotate their auditors? If so, how often?
Do you believe it was necessary for governmental intervention into the private market for audits? Why or why not? Why do you believe 14 years was chosen as a time by which firms must terminate their audit firm and hire a new one?
In your opinion, should auditors face criminal liability (not just civil)? What are the potential negative consequences of the proposed law in Hong Kong?
If you worked at a Big 4 firm and were the lead partner on an audit, how would you work with a smaller audit firm in a so-called “joint audit”? If you were on the audit committee for a company (in charge of hiring an audit firm), would you want to have joint audits? Who wins and who loses in joint audits?
Should the FASB have pushed for more qualitative disclosures about going concern? What would be the downside?
Do you agree it’s the “accounting lobby” stopping the bill because they’d lose SOX section 404 audit fees? Is this a case of over-regulation to the detriment of private capital formation and job creation?
