TheCorporateCounsel.net

There is nothing like an election year to focus attention on the staggering amounts of money sloshing around in our political system. Inevitably, questions arise as to the role of large companies in political giving. Answers to those questions aren’t likely to be found in the 10-Ks, proxy statements or websites of most public companies, because the SEC has never adopted an item requirement calling for specific disclosure of political contributions. That hasn’t stopped groups from seeking such disclosure (and related policies on political giving), principally through the shareholder proposal process – and generally support for these efforts has been on the rise over the past few years.

As noted in the FT.com article from last week, five more large US companies – American Express, Xerox, Washington Mutual, Capital One and Texas Instruments – have agreed to publicly disclose amounts spent for political purposes. The Center for Political Accountability, one of the groups that is seeking more disclosure in this area, lists 38 other companies that have adopted a policy geared toward transparency about political spending. Here are recent political contribution reports from some of these companies:

– American Express
– General Motors
– Johnson & Johnson
– Monsanto

For more information on this topic, check out our “Political Contributions” Practice Area.

PCAOB Proposes New Auditing Standard on Engagement Quality Review

Amazingly enough, Sarbanes-Oxley directed rulemaking/standard-setting continues to this day. The PCAOB announced last week that it has now proposed standards under Section 103 of the Sarbanes-Oxley Act, which directed the Board to adopt standards requiring each registered public accounting firm to provide a concurring or second partner review and approval of each audit report (and other related information), as well as concurring approval in its issuance.

The PCAOB had previously adopted – as an interim quality control standard – SECPS Requirements of Membership Section 1000.08(f), which was the concurring partner review requirement imposed by the SEC Practice Section of the AICPA.

As noted in this proposing release, the PCAOB’s proposed standard takes a risk-based approach to the second level review. The standard would require the engagement quality reviewer to “assess whether there are areas within the engagement that pose a higher risk that the engagement team failed (1) to obtain sufficient competent evidence or (2) to reach an appropriate conclusion.” In making these assessments, the reviewer would evaluate whether the engagement team responded appropriately to risks, whether the judgments made were reasonable, and whether the engagement team’s overall conclusions were supported by the results of the procedures performed. This review would be required for all engagements performed in accordance with PCAOB standards, including integrated audits of financial statements and reviews of interim financial information, and it would need to be obtained before the firm could grant the client permission to use the engagement report (or communicate a conclusion in the absence of a report).

The PCAOB proposes that the engagement quality reviewer be an associated person of a registered public accounting firm that is independent of the client. The reviewer must also be “competent, perform assigned procedures with integrity and maintain objectivity with respect to the engagement and the engagement team.” The reviewer could be a partner or other person within a firm, or someone from outside of the firm.

The proposed standard is out for public comment until May 12th.

Finding the Right Law Firm: Improving Your RFP Process

In this podcast, Rees Morrison of Hildebrandt International provides some insight into law department requests for proposal issues, including:

– What are the common mistakes in-house counsel make?
– Ten nuggets for improving the request for proposal process

– Dave Lynn