Sarah Johnson, CFO.com | US
February 27, 2008

final word

SEC rules require that issuers provide audited statements in accordance with GAAP. So long as audited statements are required the issuer's opinion matters not, only what the auditor says.

Suppose and issuer prepares statements that say income was $1 billion, auditor says, "No, I won't say those are GAAP. My opinion is different."

As a preactical matter, finding another auditor who will share the issuer's opinion cannot be timely or economically done.

The better solution is to allow the issuer to issue his own statements, allow the auditor to issue his, with both taking liability (whatever that might be) for their own.

Currently we pretend that the statements are issued by the audited corporation. Let's drop that pretense.

Posted by Roland Cycan | Mar 3, 2008 9:18 AM ET

Leaving it to Peer Review

I totally disagee with the previous comment about allowing peer review to determine anything of this magnitude. Peer review is partially subjective at best and to trust something like this to peer review is inviting disaster to the firm being reviewed.

Posted by Richard Hawkins | Feb 28, 2008 3:27 PM ET

Professional Judgment

Perhaps both Roper and Nussbaum have it right. An audit trail of the process by which a judgment is reached is a good thing. But, it must not become just another CYA exercise. So, don't bury the documentation in company files or audit work papers; put it in the 10-K for everyone to see and to judge for themselves.

Posted by Thomas Selling | Feb 27, 2008 4:56 PM ET

Auditor Judgement

What ever happened to peer review as a mechanism for evaluating the approriateness of proceedures used to conduct audits

Posted by Rick Macchiarulo | Feb 27, 2008 4:38 PM ET