Audit Firm Rotation – Coming to a Theater Near You?
December 7, 2011 by LuAnn Bean
Filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized
On Wednesday, November 30, the Internal Market Commissioner, Michel Barnier, suggested that radical changes are needed for auditing firms. Barnier said recent apparent audit failures at AngloIrish and Lehman Brothers banks, BAE Systems and Olympus “would strongly suggest that audit is not working as it should”. Under Barnier’s plan, the four top firms will have to separate audit activities from non-audit activities, such as tax and other advisory services — “to avoid all risks of conflict of interest”. It appears that the world’s top four audit firms will have to split up and rename themselves under a far-reaching draft European Union law to crack down on conflicts of interest and shortcomings highlighted by the financial crisis.
Questions:
1. Just four audit firms — Ernst & Young ERNY.UL, Deloitte DLTE.UL, KPMG KPMG.UL, and PwC PWC.UL — check the books of 85 percent of blue-chip companies in most EU states, a situation the Commission said was “in essence an oligopoly”. What is an oligopoly?
2. What does the EU plan propose to ban in relationship to loans? Explain.
3. Barnier, under pressure from some fellow commissioners, has decided to drop which part of the plan? What is the reaction by some, including BDO, an audit firm in the second tier firms?
4. What is your reaction to the proposal and the move by regulators in the U.S. to consider more auditor rotation regulations?
Source:
Jones, H. (2011). Big Four Auditors Face Breakup to Restore Trust, Reuters, Nov. 30 (Retrievable online at http://in.reuters.com/article/2011/11/30/eu-auditors-idINDEE7AT0CQ20111130)
Visual Forensic Accounting Skills Are Assets In Divorce Consulting
April 10, 2010 by LuAnn Bean
Filed under All Articles, Auditing, Financial Accounting, Fraud Accounting, Video Updates
Clearly laying out key ideas and arguments that support divorce proceedings are becoming a critical success factor for forensic accountants who consult in this area. As author, Dan Roam The Back of the Napkin by Dan Roam asserts visual thinking is critical in the business world and forensic accounting is no exception. For the forensic accountant, specializing in divorce consulting, being able to effectively create visual tools such as tables, charts, diagrams, and graphs can help make and emphasize key points that are critical for laying out financial information before a judge.Â
Questions:
1. What are examples of the areas where a CPA and forensic accountant can help develop and illustrate financial matters in a divorce? What basic financial accounting concepts are important to understand for an accountant specializing in this area?
2. Explain why communication skills are so important for forensic accountants that specialize in divorce engagements.
3. Why would a forensic accountant need to use the imagination part of Dan Roam’s concept of visual thinking?Â
Source: Dow, Alexis. (2009). When and How to Use a Forensic Accountant in Your Divorce. THE OREGON DIVORCE BLOG October 26, 2009 (Retrievable at http://oregondivorceblog.com/wordpress/2009/10/when-and-how-to-use-a-forensic-accountant-in-your-divorce/)
Roam, Dan (2010). The Back of the Napkin promo video. BNET (Retrievable at http://www.bnet.com/2422-13724_23-196933.html# )
