Mr. Harris has a unique perspective on global audit concerns as the Chair of both the PCAOB Investor Advisory Group and the International Forum of Independent Audit Regulators (IFIAR), an organization consisting of 43 independent audit oversight bodies who share the common goal of improving audit quality globally. According to member Harris, both of these investor advisory groups and they serve to provide both the PCAOB and the members of IFIAR with investors' views on areas of concern with respect to financial reporting and related auditing practices.
IFIAR issued a press release after its recent plenary meeting in
providing an update on inspection findings in their jurisdictions. Areas were
identified where findings were common to a number of jurisdictions, such as auditor
professional skepticism, group audits, revenue recognition, testing of internal
controls, and auditor independence. These findings demonstrate how much work
needs to be done to improve audit quality, said Member Harris, and how
important it is that the cooperation and sharing of information among audit
regulators continue. Busan, Korea
Ten years after the Sarbanes-Oxley Act changed public company corporate governance in a number of fundamental respects, he noted, the number of concerns raised by PCAOB inspection staff is on the increase, and the Board is seeing a troubling rise in the volume of significant audit deficiencies in important areas, including auditing internal controls, inventory, revenue and expense recognition, valuation of goodwill, and fair value measurements. While initially the Sarbanes-Oxley Act was viewed as addressing issues strictly at US companies, he continued, the problems were not restricted to just the United States as witnessed by the financial reporting failures of companies throughout many other parts of the world, including Parmalat, Vivendi, Hollinger, Ahold, Royal Dutch Shell, China Aviation and others.
Today, more than 40 countries and jurisdictions have adopted similar systems to oversee and regulate auditors and, while some of those systems differ in structure and approach from the
US, observed the Board official, the
goal is the same, to improve audit quality for the protection of investors. U.S. law
requires the PCAOB to conduct periodic inspections of all firms that are listed
on American exchanges and, to date, the PCAOB has conducted inspections of over
190 non-U.S. audit firms located in 38 foreign jurisdictions. Many of those
inspections were conducted jointly with the local oversight authority.