A group of 20 trade associations, consisting of the American Bankers Association, collaborated Monday to raise interest in a proposition to broaden the requirements for auditors to recognize, assess and interact all business offenses of laws and guidelines. The Public Company Accounting Oversight Board provided the proposed guideline in June after a split 3-2 vote in which the dissenting board members revealed major issues. In their letter, the associations—which represent a bulk of U.S. auditors and organizations based on audits under PCAOB requirement—stated the language in the guideline is unclear and threatens to turn regular audits into extensive examinations.
“With respect to the legal function, auditors may be put into a position to second-guess a company’s own legal counsel regarding whether noncompliance may have occurred,” the groups stated. “With respect to the management function, the requirement that auditors perform ‘enhanced risk assessment procedures’ could result in auditors second-guessing how management allocates the company’s financial and human resources. This would not only blur responsibility between the legal, management and audit functions, but would also divert auditors’ time, attention and resources away from auditing financial statements.”
The groups likewise kept in mind that U.S. business currently have strict duties for legal and regulative compliance, in addition to a series of suitable ‘checks’ versus noncompliance. “Various federal and state regulatory authorities in the United States have a responsibility to examine, monitor and, where appropriate, bring enforcement actions against companies that do not adhere to laws and regulations,” they stated. “Moreover, given the many and varied private rights of action available against corporations in the United States, companies are subject to even further scrutiny and liability for noncompliance.”