Lottery System Would Help

BY WILLIAM E. OWENS

I agree with the letters, “ Disappointed with JofA News ” and “ Profession Needs Monitoring and Control ” ( JofA , Sep.02, page 13).

I, too, believe lack of independence is the primary problem in the auditing process. Our leaders have for decades foisted on the American public the folly that we are independent because we say we are. The SEC and the rest of government have bought into that notion. No auditor can possibly be independent when the auditee hires and fires the auditor. The fact that the client pays the auditor isn’t the problem; the core problem is the hiring and firing.

The conflict would be eliminated if the SEC instituted a lottery to pick auditors and, after the first one was held, rotated 20% of audits each year, getting every publicly held company on a five-year rotation, or rotated one-third of audits each year, putting companies on a three-year-rotation schedule. Price bidding should never be part of the equation. Qualifications bidding should be required to get into the audit lottery pool in the first place. For example, a firm that lacks the adequate staffing, experience and specialized education to audit WorldCom would not be allowed in the lottery for that audit. Also, failure to detect the incorrect capitalization of several billion dollars of expenses should be a clear sign the auditor isn’t qualified.

William E. Owens, CPA
Roswell, Georgia

SPONSORED REPORT

Revenue recognition: A complex effort

Implementing the new standard requires careful judgment. Learn how to make significant accounting judgments and document them and collaborate with peers for consistent application.

TECHNOLOGY Q&A

How to create maps in Excel 2016

Microsoft Excel 2016 has two new mapping capabilities. J. Carlton Collins, CPA, demonstrates how to make masterful 2D and 3D maps in Excel 2016.

QUIZ

News quiz: Economy and health care changes top CPAs’ list

CPA decision-makers’ economic outlook and the House Republicans’ proposed tax changes as part of replacing the Patient Protection and Affordable Care Act received attention recently. See how much you know with this short quiz.