Fair value is another such issue. Both auditors and CFOs surveyed by CFO say that it is one of the top factors that will add to audit costs in the coming year. That's mainly because it means extra work for both the company and the auditors. "When we go to full fair value, I don't think there will be enough experts around for everyone," says Wieman.

Many auditors say they try to work with a company in advance on fair-value issues so that the numbers don't come as a surprise during the audit. Still, the amount of work involved in estimating fair values is daunting. When it comes to valuing thinly traded securities, for example, a company could once rely on a single broker quote. Now the accounting staff needs to either interview the broker about how she or he arrived at the estimates, obtain multiple broker quotes, or supplement a single quote with some modeling based on recent trades of similar securities.

Yet another reason auditors need more time is the PCAOB's Auditing Standard No. 3, which prescribes general requirements for audit documentation. Before AS3, auditors used to have casual discussions with clients about such topics as valuations and cash projections and then write a general memo. Now they need to drill down much deeper and document each step along the way. "If you don't talk about every assumption and how you tested it, you could be in trouble," says Wieman.

Judgment Days
What can be done to break the audit logjam? Regulators have been working on various measures to ease external pressures on auditors. One, the recently implemented AS5, is already having an effect. The standard allows auditors to focus on the riskiest areas of internal controls rather than probe all controls in detail.

AS5 "was like taking a breath," says Robert Kueppers, deputy CEO of Deloitte. He says the standard signaled a shift away from the PCAOB's pressure on auditors to "do more, do more, do more." So far, it has reduced the time on engagements, albeit not dramatically so. "AS5 has at least allowed us to hold the line on audit costs," says Kueppers.

But the real importance of AS5, adds Kueppers, is that "it gives renewed credibility to the use of professional judgment — that you can make a reasonable assessment about what needs to be probed and it will be respected." While the PCAOB has yet to inspect the first of the new, risk-based audits (that will likely take place this summer), Kueppers is "confident" Deloitte's judgments will be affirmed.

Related to the emerging notion of allowing auditors to exercise more judgment, the SEC's Committee on Improvements to Financial Reporting is mulling the creation of a judgment protocol, or list of recommended steps, for both companies and auditors. By following the protocol, auditors would enjoy a degree of protection from lawsuits if it turned out they were wrong about which transactions to test or what accounting treatment was proper. Not surprisingly, auditors applaud the idea. "What we're looking for is a framework to follow [that makes us feel we're] in good shape," rather than a safe harbor that would inoculate them from any consequences, says Wieman.

The Treasury Department, meanwhile, is sponsoring a committee that is considering a range of actions to encourage audit firms to grow their practices, including liability caps for auditors, a redefinition of the auditor's responsibility to detect fraud, and a safety net to avoid the loss of a large firm. Headed by former SEC chairman Arthur Levitt and former SEC chief accountant Don Nicolaisen, Treasury's Advisory Committee on the Accounting Profession is due to release recommendations this summer.

As for the audit firms, some are staffing up so that clients' foibles exact less of a toll. Moss Adams, for one, says it schedules auditors for 50 to 55 hours per week during the busy season and generally makes sure no one works more than 60 hours per week. The firm is also building extra "wrap-up" time into its auditors' schedules for the two weeks following an engagement, so that the inevitable follow-on issues don't create extra scheduling pressures, says Kris Dunning, a partner in the firm's San Francisco office. Moss Adams is trying to spread more of its work over the year and no longer requires all auditors to come in on weekends during busy season. "This is the best busy season I can remember," says Dunning, who has been with the firm 18 years.

PricewaterhouseCoopers (PwC) hopes that taking a more behavioral approach to engagements will promote client cooperation. To that end the firm is stressing the importance of empathy and training its auditors to better communicate the value of their work.

"You have to think about standing in [your clients'] shoes," says Robert Moritz, U.S. assurance leader at PwC. "We make sure our people try to keep in mind that how you deliver the message is as important as the message itself." So far, PwC surveys indicate that "client perceptions of the relationship [have moved] in the right direction," says Moritz, although he concedes that "we've got a lot of room to improve."

In the end, though, auditors can tolerate only so much annoyance. Most audit firms conduct an annual "client continuance" assessment, and many are getting tougher about which clients they'll keep and which they won't. UHY, for example, recently ended a five-year relationship with a client after the company's CFO berated the audit staff. "You just can't have that stuff," says Larry Kaplan, managing partner of the Boston office of UHY. "There's enough pressure in this profession without that."

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