Posts Tagged ‘James Doty’

Challenges Facing the Audit Profession and PCAOB Initiatives

Posted by James R. Doty, Chairman, Public Company Accounting Oversight Board, on Thursday May 2, 2013 at 9:40 am
  • Print
  • email
  • Twitter
Editor’s Note: James R. Doty is chairman of the Public Company Accounting Oversight Board. This post is based on Chairman Doty’s keynote address at the Rice University Director-to-Director Exchange; the full text, including footnotes, is available here. The views expressed in the post are those of Chairman Doty and should not be attributed to the PCAOB as a whole or any other members or staff.

As you know, over the past couple of years, together with the board members and staff of the Public Company Accounting Oversight Board, I have been working to enhance the reliability of the external audit function and its usefulness to U.S. capital markets.

I will start off with an overview of some of the more significant issues confronting the audit profession. And then I’d like to open a more interactive discussion.

I. Corporate Governance Has Evolved to Suit the Needs of Capital Markets.

I have known many of you for years. I have watched and admired how you have navigated the many changes we have seen in both the energy industry and corporate governance.

Many of us have gained significantly more experience than we expected in identifying, addressing and preventing future threats to corporate success, such as differences in cultural expectations and business practices around the world and at home. Enron had a profound effect on Houston.

As this morning’s discussion demonstrated, you recognize that your work is never done. There is no perfect governance regime for all time.

…continue reading: Challenges Facing the Audit Profession and PCAOB Initiatives

Enhancing the Relevance, Credibility and Transparency of Audits

Posted by James R. Doty, Chairman, Public Company Accounting Oversight Board, on Monday December 17, 2012 at 9:13 am
  • Print
  • email
  • Twitter
Editor’s Note: James R. Doty is chairman of the Public Company Accounting Oversight Board. This post is based on Chairman Doty’s remarks before the AICPA National Conference on Current SEC and PCAOB Developments, available here. The views expressed in the post are those of Chairman Doty and should not be attributed to the PCAOB as a whole or any other members or staff.

I. High Quality, Independent Auditing is Critical to Our Economic Success.

As I have learned in this job, getting the accounting right is indeed not the same thing as getting the auditing right. My sense from accountants I talk to is that auditing is receiving well-deserved attention in its own right.

Our economic success depends on the confidence of the users of capital and the providers of capital alike. Corporate managers hire internal accountants — many of you here today — to ensure they have accurate and detailed information on which to base management decisions. Managers ignore opportunities to glean trends and insights from this data at their peril.

Mistakes in this information can send a company into a business line or market that squanders resources. We now know that the true cost of financial misstatement is much greater than stock market fallout, concomitant lawsuits and insurance claims.

…continue reading: Enhancing the Relevance, Credibility and Transparency of Audits

PCAOB Regulatory Initiatives

Posted by James R. Doty, Chairman, Public Company Accounting Oversight Board, on Saturday December 1, 2012 at 9:03 am
  • Print
  • email
  • Twitter
Editor’s Note: James R. Doty is chairman of the Public Company Accounting Oversight Board. This post is based on Chairman Doty’s remarks at the Practising Law Institute’s 44th Annual Securities Regulation Conference, available here. The views expressed in this post are those of Chairman Doty and do not necessarily reflect the view of the PCAOB as a whole or any other Board members or staff.

I am here to talk about the regulatory initiatives of the Public Company Accounting Oversight Board. The PCAOB is deeply engaged in examining ways to enhance the relevance, credibility and transparency of the audit to better serve investors.

The auditing profession has developed a highly skilled body of experts capable of analyzing accounts in a way that draws out truths and insights and sheds light on confused or misleading claims. It plays an indispensable role in making our capital markets fair and strong.

But I believe we are in a high risk period that merits more attention to the audit, not less. When companies make lay-offs, as we’ve seen recently, they often affect the internal audit and compliance staff — the first line of defense for fraud and other corporate malfeasance. This should be a concern to the legal community.

Although we have never needed it more, the audit too has, in the minds of some, become a commodity to be contained with other compliance costs.

In the United States, large audit firms’ revenues from consulting are growing 15 percent a year. Audit fees have stagnated at, basically, the inflation rate. Thus audit practices have shrunk in comparison to audit firms’ other client service lines.

This can weaken the strength of the audit practice in the firm overall. The problem is compounded when audit firms turn their talents to other endeavors that may further damage public views on the relevance and value of audit.

To be relevant, the auditor must speak to and for investors. Fair or not, that is in question today.

…continue reading: PCAOB Regulatory Initiatives

The Relevance of Audits and the Needs of Investors

Posted by James R. Doty, Chairman, Public Company Accounting Oversight Board, on Sunday June 24, 2012 at 9:06 am
  • Print
  • email
  • Twitter
Editor’s Note: James R. Doty is chairman of the Public Company Accounting Oversight Board. This post is based on Chairman Doty’s remarks before the USC Leventhal School of Accounting 31st Annual SEC and Financial Reporting Institute Conference, which are available (including footnotes) here. The views expressed in the post are those of Chairman Doty and should not be attributed to the PCAOB as a whole or any other members or staff.

This is a special year in many respects. We have our own concerns at home. But those of us who find our work on financial terrain have our sights trained east, toward Europe, and west, toward China, more than in past years.

In the broader population, there is new apprehension for effects we don’t know but must nevertheless judge. Will European states muster a defense to the behavioral contagion of financial panic? Will they find a way to use their inter-dependence to make Europe financially stronger? Or will they find that too many divergent interests must agree to save the European experiment? How will the U.S. be affected?

Looking toward China, many say that that nation’s economic growth cannot continue without structural changes. Can China instill its new, investing middle-class with confidence that financial markets will provide for its future? From our larger companies to our smaller entrepreneurs, we are doing business in China. Can we have confidence that China isn’t the latest iteration of — pick your era — the Tulip Scandal, the silver-mine frauds of the Old West, the S&L bust? And how should we deal with these risks in a global economy?

These are questions that require that admirable quality we often call vision. When we speak of vision, we speak of visionaries. That is, people who have stepped out from the crowd and revealed something that the rest of us could not see. There are false visionaries, who inspire us to act based on what we or they wish might be. But the true ones give us honesty, and invaluable leadership.

…continue reading: The Relevance of Audits and the Needs of Investors

Auditing in the Decade Ahead: Challenge and Change

Posted by James R. Doty, Chairman, Public Company Accounting Oversight Board, on Sunday January 8, 2012 at 10:03 am
  • Print
  • email
  • Twitter
Editor’s Note: James R. Doty is Chairman of the Public Company Accounting Oversight Board. This post is based on Chairman Doty’s remarks before the Canadian Public Accountability Board’s Audit Quality Symposium, which are available here. The views expressed in the post are those of Chairman Doty and should not be attributed to the PCAOB as a whole or any other members or staff.

I will discuss some common themes pervading the regulation of audits, regardless of what country you are in. Certain structural challenges threaten the relevance of auditing. These threats rise at a time when confidence in business reporting is more important than ever. We are also affected by geopolitical forces that threaten both the regulation of audits as well as the audits themselves.

I do not believe any of these challenges, or the threats accompanying them, are insurmountable. But they must be confronted. I do believe overcoming them will require concerted, collective commitment and action.

I. Auditor Skepticism is the Foundation for Investor Confidence in Financial Reporting.

I want to begin with the motivating idea for this conference. A prolonged global financial crisis continues to jeopardize economies everywhere: in the Americas, in Europe, in Australia and Asia. Our people have a shared agenda to restore hope in their futures. Our families have shared agendas to be assured they have the resources to maintain their homes, rear their children with confidence in their ability to prosper, and provide for elders with dignity and respect for the achievements of their generations.

…continue reading: Auditing in the Decade Ahead: Challenge and Change

 
  •  » A "Web Winner" by The Philadelphia Inquirer
  •  » A "Top Blog" by LexisNexis
  •  » A "10 out of 10" by the American Association of Law Librarians Blog
  •  » A source for "insight into the latest developments" by Directorship Magazine