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Thomas, W. & Wedemeyer, P. (2013). Clarifying the standard for group audits. Journal of Accountancy, 58(1), 23-25.
This article appears in this month’s edition of Journal of Accountancy. The article is authored by two CPAs with advanced education and expertise in accounting. The article features the latest addition to the Generally Accepted Auditing Standards (GAAS). This latest addition by the Auditing Standards Board is specified in AU-C600 Standard (Thomas & Wedemeyer, 2013). According to this article, this standard is meant to provide clearer guidelines for accounting projects involving group audits. Group audits refer to projects in which most of the work is performed by various auditors but only one auditor expresses the group’s opinion.
This article is very informative and it covers important issues that make group audits a challenge. Examples of these problems include the risk of having errors in financial statements done by a group. This risk was previously addressed in the AU-C 315 and 320 standards. This new standard also addresses the risk of managing decentralized audits and the risk arising when consolidating statements from such audits. The goal of these new regulations is to make sure that the group’s auditor has the necessary tools to effectively deal with the above risks.
The article also does a good job in outlining the responsibilities of a group auditor under the new standards. This article sheds light into what will be expected from group auditors. For instance, the group’s auditor will have to be accountable for the job done by other auditors. In addition, the group auditor will also have to adhere to a specific set of communication requirements (Thomas & Wedemeyer, 2013).
This article is very informative and thorough. The authors deliver a systematic analysis of these new standards. The article also gives very useful practical applications of these new standards. The article is a significant contribution to the existing GAAS.
McKenna, F. (2012). Already behind the eight-ball: Auditors of broker-dealers are a disaster. Forbes, 112(2), 76-77.
This article was authored by Francine McKenna and was published in the Forbes magazine. The article’s author is a CPA who has contributed to other financial publications such as Accountancy Magazine, The Financial Times, and Boston Review. The article is about the recently released report on the activities of firms that audit broker-dealers. According to the article, the report discovered a myriad of contraventions by the auditors of these broker dealers.
One of the most interesting issues brought to the surface by this report is the fact that all of the twenty-three firms that were being audited had some violations (McKenna, 2012). It was also the first time for most of these firms to be audited. The article also highlights the special responsibilities bestowed upon the auditors of broker-dealers. The violations outlined by the report are covered by the Generally Accepted Auditing Standards (GAAS).
The other pertinent issue raised by the article concerns the void created by unprofessional audit firms. According to the author, it is better to have few professional audit firms as opposed to having many unprofessional ones. Most of these are small firms who have “faked” their way to the top. The article attributes this trend to a laxity in regulation by the regulatory bodies. Interestingly, this blame seems to be shifting from the big firms to the small firms.
This article is a good analysis of audit firms that deal with broker-dealers in the United States. However, the author seems to hold a bias against the upcoming firms. Overall, the article’s detailed account of the report is convincing enough for anyone to notice that adequate regulation is lacking.
References
McKenna, F. (2012). Already behind the eight-ball: Auditors of broker-dealers are a disaster. Forbes, 112(2), 76-77.
Thomas, W. & Wedemeyer, P. (2013). Clarifying the standard for group audits. Journal of Accountancy, 58(1), 23-25.
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