Feel Free Read The Truth About Public Accounting: Understanding and Managing the Risks the Auditors Bring to the Audit PDF
The Truth About Public AccountingThis book was written to help audit professionals, audit committees, and regulators understand the web of auditor conflicts that threaten audit quality. The conflict between audit quality and profitability, coupled with the ill-effects of commodity pricing, has put large firm auditors in a squeeze for both productivity and audit quality. The resulting “heavy workload – high turnover” business model is inherently inefficient and a mismatch for the complexity auditors need to master to deliver audits of suitable quality. The author debunks the "Best Places to Work" surveys that reflect so favorably on the Big Four. He also faults the PCAOB for failing to do anything in its 18-year history to remedy the mismanagement of human capital by the largest audit firms. The author describes how and why audit committees should determine whether the human capital conducting their audit has been mismanaged (as evidenced by excessive partner and staff workloads, low year-over-year continuity, low staff experience levels, high leverage ratios of staff to partners, and under-delivery of expertise from specialists). If auditor human capital has been mismanaged, the audit committee needs to understand, "What did the audit firm do to assure that audit quality was not compromised?"This book also describes the conflicts between audit quality and client retention that can undermine the audit partner’s fortitude to do the right thing. Audit committees will learn how they can mitigate the many risks the large audit firms bring to each audit.The author also presents data, academic survey results, and anecdotal information that question whether PCAOB inspections are excessively focused on internal controls to the detriment of attention to audit procedures that assure reported results comply with GAAP. The author’s views are rooted in facts drawn from the Big Four transparency reports, PCAOB inspection reports, reported audit failures, academic studies, SEC and PCAOB speeches, and "Best Places to Work" surveys.Robert Conway’s 360° View of the Auditing ProfessionThe author is a retired Big Four audit partner. He also spent nine years at the PCAOB leading inspection teams and led the PCAOB’s Los Angeles and Orange County offices. More recently, he worked for three years as a consultant to public companies on technical accounting issues and SOX 404 compliance.
