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[Snoopy]

Check out the new article at www.advmca.org!!

[Bob Pickle]

Could you share some thoughts on how one can ensure that an independent auditor is truly independent?

Alan Lovejoy would be called an independent auditor, but I'm not sure his audits of 3ABN were really adequate. Did 3ABN hide all the evidence of kickbacks from him? While he annually complained in his official reports about lack of proper accounting of the funds sent to Russia, why did he never complain about Danny's book deals, especially the ones with Remnant for books that Remnant didn't stock?

[Snoopy]

No.  I know what it is like to try to dialogue with you.  Ask Yevgeny.

[Bob Pickle]

OK. I've written Yevgeny and asked him or her to respond. We'll see if we get any answer.

[Daryl Fawcett]

No answer yet?

[Bob Pickle]

No. No answer yet. Perhaps --- might take a stab at answering the question, or might suggest someone else who might want to give it a try.

[Gailon Arthur Joy]

Like always, it all comes down to integrity...if there is a chink in that armor then the most important issue..."what must I say to make sure I get paid again for the next thirty years until I make partner and retire?"

We have seen several former big ten accounting firms virtually disappear because billable hours over-rode integrity and the truth, and far too many victims have been left in the wake...it is a result of the virtual moral decay in western society as religion and ethics have given sway to dollars and cents!!!

[Snoopy]

Very true, Mr. Joy.

Interestingly, that article even brought Stefan back out from under his rock.     

[Snoopy]

Hi Steffan!!!         

Happy Sabbath!!

[Bob Pickle]

I asked about this story at our conference town hall meeting yesterday. The treasurer had not heard of it, but he said that over the last 4 or 5 years, audits have become much more prosecutorial, so that it seems like they are being audited by an outside firm. If I understood correctly, stricter international auditing standards are being used. There are extra controls they are having to employ in their day-to-day operations.

The story in the article, do you know if it occurred around that time period, 4 or 5 years ago, after which things started getting stricter?

[Snoopy]

Bob, apologies for my earlier snippy answer to you.  I was out of line and I hope you can forgive me.

Lovejoy would be considered an independent auditor in that he is not employed by the organization he is auditing.  That being said, audit fees sometimes enable an auditor to overlook some things simply to keep the revenue rolling in.  My alma mater, Arthur Andersen & Co., is a great example.  I will never forget the day I had a face-to-face conversation with Lovejoy about some concerns I had and his responding snicker and somewhat smug answer.  It seemed a bit odd at the time, but now his response makes a lot more sense to me.

One possibility not yet considered as far as I know would be peer review.  Any CPA firm doing attest work (meaning an audit or a review - an engagement where the product is the CPA's written opinion on the material accuracy of the financial statements) must submit to a peer review every three years which is just what the name implies - a review of the firm's attest work by another CPA firm.  Typically the peer reviewer selects a sample of the subject firm's attest engagements to perform their own review of the subject firm's procedures and workpapers.  The peer review results are not necessarily made public, but could play a role in the detection of a possibly defective audit.

Could you share some thoughts on how one can ensure that an independent auditor is truly independent?

Alan Lovejoy would be called an independent auditor, but I'm not sure his audits of 3ABN were really adequate. Did 3ABN hide all the evidence of kickbacks from him? While he annually complained in his official reports about lack of proper accounting of the funds sent to Russia, why did he never complain about Danny's book deals, especially the ones with Remnant for books that Remnant didn't stock?

[Snoopy]

I asked about this story at our conference town hall meeting yesterday. The treasurer had not heard of it, but he said that over the last 4 or 5 years, audits have become much more prosecutorial, so that it seems like they are being audited by an outside firm. If I understood correctly, stricter international auditing standards are being used. There are extra controls they are having to employ in their day-to-day operations.

The story in the article, do you know if it occurred around that time period, 4 or 5 years ago, after which things started getting stricter?

It was the spring of 2011.  Perfect timing!  But it sounds like the extra controls are being selectively employed.  While I was there, the GCAS North American Audit Director was more interested in pushing audits through the system as quickly as possible vs actually taking the time to do a quality audit and identify/report issues that the constituents  should know about.

[Bob Pickle]

Bob, apologies for my earlier snippy answer to you.  I was out of line and I hope you can forgive me.

No problem, and welcome back!

One possibility not yet considered as far as I know would be peer review. ... The peer review results are not necessarily made public, but could play a role in the detection of a possibly defective audit.

An audit of the auditor. Excellent idea. But I would suggest that the results be made public. The lack of that regarding judicial complaints can allow things to happen that shouldn't, and so I would think that the process being public would help prevent abuses.

It was the spring of 2011.  Perfect timing!  But it sounds like the extra controls are being selectively employed.  While I was there, the GCAS North American Audit Director was more interested in pushing audits through the system as quickly as possible vs actually taking the time to do a quality audit and identify/report issues that the constituents  should know about.

Do you think they are being selectively employed now? Can you comment at all on which entity was being audited?

[Snoopy]

Bob, apologies for my earlier snippy answer to you.  I was out of line and I hope you can forgive me.

No problem, and welcome back!

One possibility not yet considered as far as I know would be peer review. ... The peer review results are not necessarily made public, but could play a role in the detection of a possibly defective audit.

An audit of the auditor. Excellent idea. But I would suggest that the results be made public. The lack of that regarding judicial complaints can allow things to happen that shouldn't, and so I would think that the process being public would help prevent abuses.

It was the spring of 2011.  Perfect timing!  But it sounds like the extra controls are being selectively employed.  While I was there, the GCAS North American Audit Director was more interested in pushing audits through the system as quickly as possible vs actually taking the time to do a quality audit and identify/report issues that the constituents  should know about.

Do you think they are being selectively employed now? Can you comment at all on which entity was being audited?

Thank you, Bob.

I have no idea how things are operating there now, but I have no reason to believe anything has changed.

I cannot reveal the name of the entity referred to in the article.