Magazine article The CPA Journal

Allies in Protecting Shareholder Interests

Magazine article The CPA Journal

Allies in Protecting Shareholder Interests

Article excerpt

The Public Oversight Board of the AICPA's SEC Practice Section recently issued a short, brochurelike report, "Allies in Protecting Shareholder Interests," which seeks to rally directors, management, and auditors to work to implement the spirit of the recommendations contained in an earlier report sponsored by the POB, Strengthening the Professional of the Independent Auditor.. The main thrust of the earlier report was to put forward the notion for the public company that the independent auditor's client is the board of directors and not management and that the auditor should deliver forthright, candid, oral reports on the quality of a company's financial reporting, not just the acceptability.

The current report explains in greater detail how such a relationship can be achieved. The report has separate sections for each member of the financial reporting team.

* Responsibilities of Management. To bring to the attention of both the independent auditor and audit committee the accounting implications of significant new transactions and policies while they are being contemplated.

* Responsibilities of the Independent Auditor. "The auditor should express his or her views about the appropriateness, not just the acceptability, of the accounting principles and financial disclosure practices used or proposed to be adopted by the company and about the degree of aggressiveness or conservatism of its accounting principles and underlying estimates and the relevance and reliability of the resulting information for investment, credit, and similar decisions. …

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