Going a Step Further Toward Auditor Independence
I agree with Robert J. Sack and Mark E. Haskins’ article in the June issue that states that auditors cannot be truly independent if they are compensated by their audit clients. Especially if a CPA firm is being compensated by a larger client, there is always some degree of fear regarding possibly losing that client.
It is the users of the financial statements who should be engaging and compensating us for audit and attest services, not the companies that we are auditing. I agree with the idea of having the publicly traded companies pay an extra fee to the SEC and having the SEC select and engage the CPAs to audit the publicly traded companies.
With private companies, I would even go a step further. I feel that the banks, investors, bonding companies, and other users of the financial statements should be the ones engaging the CPAs, and they could pass the cost of the audit on to their clients’ companies. There should then be rules in place that state if you’re selected by one of the financial statement users to audit the statements, then you cannot perform any other accounting services directly for that company. Any corporations out there that you are not performing audit services for could be clients for tax, accounting, assistance bookkeeping, and other services.
Many professionals I have discussed this idea with over the years disagree with me and sometimes become angry, but I feel firmly that I am right and until this change is made, we will continue to run into the problems that we have experienced the last few years.
Peter D. Stevanoff, CPA
Buffalo, New York
©2006 The CPA Journal. Legal Notices
Visit the new cpajournal.com.