Like most CPAs I am dismayed, embarrassed, and perplexed by the recent series of audit failures. I started with Haskins & Sells in May 1965 and retired from Deloitte & Touche in May 1991. Since 1992, I have practiced as a sole practitioner doing corporate and individual tax consulting and compliance work.
I suggest that The CPA Journal publish a series of articles analyzing the recent spate of audit failures. These articles should state the reasons for each failure, what would have prevented it, and the individuals and groups that bear responsibility. For example, is it a failure of properly enunciated standards? Is it a failure of execution? Is the failure attributable to fraud?
I suspect anyone associated with an audit failure has a number of reasons, including legal liabilities and basic unpleasantness, for not wanting to talk about it. They just want it to go away. But they have a duty to the profession to determine and communicate the reason for that failure, thus allowing the profession as a whole to take the appropriate corrective action.
When Andersen, as a firm, was charged with criminal activity I believed the government was guilty of prosecutorial zeal. But perhaps the result is appropriate given the firm’s involvement in audit failures that include Enron, WorldCom, and Waste Management.
The collusion and fraud on the part of WorldCom employees was on such a scale that it had a material effect on the financial statements. The lead audit partner at Andersen and other members of Andersen’s WorldCom audit team should be interviewed. Perhaps there is a reason that this group missed $9 billion in improperly classified expenses. But regardless of the reasons, they have a duty to the profession and the American public to provide the details of what happened and why.
Daniel Currie III, CPA
Orchard Park, N.Y.
The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.
Visit the new cpajournal.com.