An Insider’s Perspective on the U.S. Department of the Treasury’s Advisory Committee on the Auditing Profession

The final report of the U.S. Department of the Treasury's Advisory Committee on the Auditing Profession was approved at an open meeting of the Committee on September 26, 2008, and it was published on October 6, 2008. The Committee concluded that steps should be taken to improve the process of fraud detection. In particular, the Committee recommended that the PCAOB establish a national center that would enhance fraud detection capability. The Committee recommends the PCAOB consider the standards for the audit report and what it can, should, or must contain. Another seemingly small, but significant, change to the auditor's report recommended by the Committee is that the PCAOB adopt a standard requiring individual audit engagement partners to sign the audit report. Several recommendations focus on the need to make sure that accounting education evolves to keep pace with the developments not only in accounting but also in business, business dynamics, and business processes. The most contentious issue the Committee faced involved what, if anything, it should recommend regarding what some members saw as the potentially catastrophic liability faced by large auditing firms that audit large public companies. The Committee ultimately recommended that the PCAOB require that publicly available financial statements be prepared and provided confidentially to the PCAOB.