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  • Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, Third Edition
    Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports, Third Edition
    by Howard Schilit, Jeremy Perler
  • Stolen Without A Gun: Confessions from inside history's biggest accounting fraud - the collapse of MCI Worldcom
    Stolen Without A Gun: Confessions from inside history's biggest accounting fraud - the collapse of MCI Worldcom
    by Walter Pavlo Jr., Neil Weinberg
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    Final Accounting: Ambition, Greed and the Fall of Arthur Andersen
    by Barbara Ley Toffler, Jennifer Reingold
  • Power Failure: The Inside Story of the Collapse of Enron
    Power Failure: The Inside Story of the Collapse of Enron
    by Mimi Swartz, Sherron Watkins
  • WorldCom: The Accounting Scandal (Congressional Research Service)
    WorldCom: The Accounting Scandal (Congressional Research Service)
    by Bob Lyke Congressional Research Service, Mark Jickling Congressional Research Service
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Main | Auditor Independence: Documents on Firm Rotation »
Monday
Jun062011

A New Push for Auditor Independence?

AuthorDavid Callahan

A key recommendation of reformers back in the early 2000s, after the Enron and WorldCom frauds, was that public companies should have to rotate their auditors every few years, so that overly cozy ties didn't undermine the independence of auditors.

That never happened. Congress decided the issue needed to be "studied" further, and the matter soon disappeared. (Although Sarbanes-Oxley does require that specific partners rotate off a company's account every seven years.) But now, in the wake of the financial crisis, some powerful regulators are asking whether it's time to revisit the issue of auditor independence and mandate rotation of firms.

Last week, James Doty, chair of the Public Company Accounting Oversight Board (PCAOB), raised this issue in a speech in Pasadena. Among other things, Doty said that PCAOB has, in fact, now studied the issue of auditor independence by reviewing several thousand cases of how auditors have engaged with firms. Along the way, inspectors have identified hundreds of cases of "audit failures."

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DateMonday, June 6, 2011 at 11:02AM |

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