Magazine article The CPA Journal

POB's View of Litigation Assailing the Profession

Magazine article The CPA Journal

POB's View of Litigation Assailing the Profession

Article excerpt

The Public Oversight Board (POB) of the SEC Practice Section recently issued its annual report in which it commented on the ultimate consequences of the flood of litigation presently assailing accounting firms. After a careful and exhaustive re-examination of its rule as an oversight body, the POB concluded its responsibility to the public does not allow it to sit on the sidelines and watch. The Board said-

(T)he public interest is adversely affected by the present litigation threat confronting the profession. The reasons for this conclusion will be set forth in detail in a special report which the Board expects to publish in 1993. In brief, these include the problems which would flow from failure of a major firm; the impact of litigation on recruitment and retention of trained and competent personnel; the unwillingness of firms to assume responsibility for the audit of smaller firms and firms in their early stages which pose greater risks of failure; the hesitancy of the accounting profession to assume new responsibilities because of litigation fears; and the possibility that firms may eventually be unwilling to give the assurances they have traditionally provided to American industry, its investors, and its creditors. …

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