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September 4, 2015 POINT OF VIEW

My first blog since coming back.

A lot has happened (and not happened…) since 2011; the PCAOB floated the idea of mandatory audit firm rotation (that didn’t happen but something close is about to happen in the EU). The SEC levied steep fines on firms for independence violations for situations ranging from lobbying on behalf of clients to business relationships with client directors or trustees.  The most recent case created a precedent for sanctioning entities beyond the firm, apparently, for their participation in creating or allowing the violation to happen.

In continuing its inspections of broker/dealer auditors, the PCAOB has cited a stubbornly high rate of independence infractions these past few years – mainly for firms keeping client books or getting indemnified for their audits.  (In the meanwhile, the firms became subject to additional independence requirements of the PCAOB).  The PCAOB has sanctioned several firms for these offenses.  The Board keeps imploring firms to clean up their act, and I suspect these enforcement actions are their way of sending a not-so-subtle wake-up call to the profession.

On a brighter note, the AICPA released its long-awaited Ethics Codification, a total revamp of the Code of Conduct, which fully integrates the conceptual framework approach, is more intuitive, and better organized.  Something good for the profession.

More to come, I’m sure.