Changes in audit environment for public accounting industry
I would say that the public accounting profession experienced unprecedented changes in regulations with the collapse of Enron and Arthur Anderson. In a sense, we saw a distinctive shift in regulatory environment if you compare the pre-Enron (self regulation by AICPA) period with the post-Enron (outside regulation by PCAOB & SEC). Since we all know about the cause of the change (a series of audit failures), we better focus on the implications of the current regulatory environment.
The first reading is a link to wiki summary of Sarbanes-Oxley Act.
The second link is on the final rule from SEC on improving auditor independence.
The third link is for website of Public Company Accounting Oversight Board created by Sarbanes-Oxley Act.
Let’ discuss the following issues that are related to above readings (For the SEC rule, you may read executive summary & background information sections only – it is quite long):
(1) Do you think the current regulatory environment would be effective in improving the quality of financial reporting and F/S audit?
(2)Why do you think the US congress & SEC always try to create an independent, nonprofit, & nongovernmental board to control public accounting profession (like FASB & PCAOB)?
Why would they want oversight, instead of direct control?
Two questions above are inter-related somewhat, so you may post your opinion on one question that may effectively answer for the other question. By no means, you don’t need to answer all questions.
