Using Public Company Accounting Oversight Board Essay (Article Review)

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Tysiac, Ken.Journal of Accountancy, 2013. Web.

Tysiac (par. 1) describes the pros and cons of a new proposal by PCAOB to have audit engagement partners disclose their names in the audit reports of public entities as discussed by various individuals in the field of accounting. It is first identified that engagement partners would hardly be known publicly in the past. However, the PCAOB proposal means that the history of the engagement partner will be developed, making it possible to see the trend and experience of the partner as an engagement partner in the past. The main details to be disclosed in the audit report include the name of the partner, the location, and the level of engagement as a partner, among other things. The information disclosed is viewed as important for investors interested in the company in rating the services provided. It is noted that other professions like doctors and lawyers already rely on the ratings of the services of other professionals, thus accounting should take a similar direction. The overall aim of disclosing the name of the engagement partner is to make the auditors remain responsible in their duties, thereby improving audit.

The skeptics of the new PCAOB proposal argue that there is the possibility of the auditors suffering liability on exposure. Moreover, auditing costs are likely to go up to cover for possible personal liability on the side of auditors. Recruiting auditing professionals will also be complicated due to stringent requirements, thereby blocking promising talent in the field of auditing. The opponents of this proposal maintain that no research evidence has proven that disclosure of the name of the engagement partner improves auditors’ accountability.

There is a group of accounting professionals who agree that there is a need to improve auditors’ accountability, but they disapprove of disclosing the name of the engagement partner as the right approach. Instead, this group of accountants argues that engagement partners are already answerable to other bodies like investors and audit committees. In conclusion, the article reports that the PCAOB is open to public comments on the issue so that a standard policy will be formulated in 2014.

Coppage, Richard, and Trimbak Shastri. “Using PCAOB Settled Disciplinary Orders to Improve Audit Quality Education.” The CPA Journal (2013): 46-50. Print.

Coppage and Shastri (46) report about the suggestion of improving the quality of audit education by relying on audit deficiencies found in settled disciplinary orders (SDOs) and releases by the PCAOB. Generally, the SDOs would be taught to prevent such violations from occurring in the future. The role of the PCAOB is largely viewed as that of oversight of audits of public companies. The board then publicly posts the summarized results of inspections done from time to time. The PCAOB has the authority to suspend registered auditors, penalize them, or revoke the registration of an auditing company or an individual when there is non-compliance. All these form the components of SDOs. The SDO is only issued as a final decision upon proceedings that are held to investigate violations of PCAOB rules by individuals or audit firms.

The authors of the article then categorize some of the major violations that the PCAOB has identified during its inspections. The first category of violations relates to the observance of general auditing standards like technical proficiency in auditing, remaining independent, as well as professional. It is assumed that complying with general accounting standards should contribute greatly to compliance with the other standards. Fieldwork standards that are mainly violated include proper planning of the audit, including supervising the assistants, applying the correct audit procedures to enable the auditor to come up with strong evidence, and having enough knowledge of internal control to help in coming up with informative audit procedures. Violations related to audit reports identified in the article include misstated financial statements, failure to report errors that were corrected, as well as failure to include an independent review in the auditing process. This set of SDOs can, therefore, be incorporated in the curricula of CPA firms and other education providers in the field of accounting for students of accounting to learn from and avoid violations of such nature in the future.

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