Attention FAE Customers:
Please be aware that NASBA credits are awarded based on whether the events are webcast or in-person, as well as on the number of CPE credits.
Please check the event registration page to see if NASBA credits are being awarded for the programs you select.

Board approves proposed change to audit requirement

Published Date:
Apr 11, 2014

The vote paved the way for the proposed change to be included in the proxy ballot mailed to all CPA members of the Society. Because revisions to the bylaws require a general membership vote, a ballot that features the proposed changes and the slate of 2014–2015 board and officer nominees is included in the April issue of The Trusted Professional.

The board moved to eliminate the rule in order to bring the bylaws into alignment with the Society’s position that public companies should not be required to rotate audit firms, as proposed by the Public Company Accounting Oversight Board (PCAOB). The PCAOB had been exploring the concept of mandatory audit firm rotation, in the interests of increasing auditor independence, since 2011, though during a Feb. 5 budget meeting with the Securities and Exchange Commission (SEC), the board’s chair, James R. Doty, suggested that it was abandoning its efforts. The original idea has received a negative response, to date: Last July, the House approved the Audit Integrity and Job Protection Act, which would bar the PCAOB from mandating audit firm rotation among public companies, and the bill is currently being considered by the Senate.

The NYSSCPA itself criticized the idea in a December 2011 comment letter. While the Society agreed that independence and objectivity are important, it argued that the PCAOB had failed to effectively link audit failures with any lack of independence. Even in cases where a lack of independence did impact the audit, the Society argued in its comment letter that the issue does not lay with the firm itself but with the engagement personnel.

The Society also cautioned that a practice such as mandatory audit firm rotation could even have a negative effect on audits, as it takes time to develop and maintain the necessary skill set to properly audit an SEC-registered firm, especially in the case of specialized industries.

Click here to see more of the latest news from the NYSSCPA.