“The Rise and Fall of Enron” ( JofA, Apr.02, page 41) is an extremely well-written piece.
As a former auditor from a regional public accounting firm, I want to see CPAs regain the integrity they deserve and would like to share some of my own ideas on the future of public accounting.
During my 17 years as an auditing manager, I audited the entire gamut of companies—from the small closely held to the publicly traded. Two years ago I gave up public accounting for a controllership position because of the obvious problems that existed in my profession.
The main problem I perceived was a lack of independence throughout the entire audit process. How can independence truly exist if such a large percentage of workers in the accounting department being audited are former employees of the current auditors?
In my opinion, public companies should be required to change auditing firms every three to five years. I foresee bid processes similar to the government’s, with the firms’ qualifications and fees being the deciding factors. This, however, leads to the second major problem that made me leave the accounting profession.
The CPA needs to be adequately compensated for the tremendous job of conducting an independent audit. Price-cutting of audit fees is ridiculous. Some regulatory body needs to establish a price range for audits. We need to make the audit profitable for accounting firms so they can focus on that specific task and can stay in business without the pressure of having to drum up consulting work—the concept of which is under scrutiny right now.
Unfortunately, I believe that the independence and the pricing should be controlled and monitored by a regulatory body because the accounting firms have shown they could not do it themselves.
Rosemary Krus, CPA