November 9, 2006

The Big 4 Speak: Auditors Want to Change Their Liability Exposure and Client’s Reporting Model

At a symposium yesterday, the CEO’s of the six largest auditors issued a joint paper seeking input on a number of topics; foremost among them is reduced liability for auditor work and changes to how clients report results. There are some far-reaching ideas in the paper, including eliminating the quarterly-reporting framework and having clients conduct forensic audits on either a regular or “as needed” basis (eg. when shareholders vote to have such an audit conducted). The auditors’ CEOs published this opinion editorial, which summarizes their paper, in yesterday’s WSJ.

Options Backdating: The SEC’s Enforcement Perspective

A few weeks ago, the SEC’s Division of Enforcement Director Linda Chatman Thomsen delivered this speech on option backdating. [Speaking of SEC speeches, I am missing today’s PLI Securities Institute – first time I have missed that conference in quite a few years. We still will be posting some notes from the Conference next week.]

PCAOB Postpones Prohibition of Tax Services

A few weeks ago, the PCAOB postponed the implementation date of the prohibited tax services rulemaking, which now will allow audit firms to perform tax work for executives of the companies they audit for another six months.

As you might recall, the PCAOB adopted Rule 3523 in July 2005, but the SEC didn’t approve the rule until April 2006. The original implementation schedule allowed auditors to provide tax services that were “in process” when the SEC approved the rule, so long as the services were completed by October 31, 2006. Now, the revised implementation schedule allows these services to continue to be performed until April 2007. [And here is your reminder about updating your pre-approval of non-audit service policies.]