An audit firm must sign its opinion that accompanies a corporation’s financial statements. An example of KPMG’s signature is shown at the right. Of course, the signature applied will look different depending on which individual engagement partner actually signs it. A Google image search on “KPMG signature” returned KPMG written by several different hands.
In “Shhh! Don’t Name That Auditor,” Floyd Norris of the New York Times blogs about the current controversy over such signatures. Two and a half years ago, the PCAOB signaled its intention to have the audit firm engagement partner sign both the name of the firm and his/her name. Beaten back, the PCAOB is now only proposing to require that the audit firm engagement partner’s name (sans signature) appear on the opinion.
Norris explains that the purpose of the proposed rule change is to help motivate the audit partner in charge to do a better job. Audit firms are against this change, and Norris explains their rationale.
If getting audit firms to accept responsibility wasn’t so frustrating, the matter would be laughable.
Let’s go back to 1776 when the 13 U.S. colonies were in the process of declaring independence. On July 2, the Continental Congress declared independence by a vote of 12 for, 0 against, and 1 abstention (later changed to yes). Although nearly 50 delegates were present, the vote was by state. On July 4, the document declaring independence was approved. Starting on August 2, the delegates signed the declaration document.
As we all know, the delegates signed their names. 56 in total.
If the delegates had signed in a manner similar to audit firms, there would have been only13 signatures, one for each of the original 13 colonies: Virginia, New Jersey, Pennsylvania, etc.
When will audit firm representatives accept some responsibility?
Debit and credit – - David Albrecht