Volume 2, Issue 5

June 2008

I. Treasury Advisory Committee Hears Testimony, Discusses Draft Recommendations

On June 3, the Treasury Department’s Advisory Committee on the Auditing Profession convened an open meeting to hear testimony on its draft report of recommendations for sustaining a strong and vibrant auditing profession.

Anne Lang, Chief Human Resources Officer, Grant Thornton LLP; Kathryn A. Oberly, Vice Chair and General Counsel, Ernst & Young LLP; Kenneth Nielsen Goldmann, Capital Markets and SEC Practice Director, J.H. Cohn LLP; and Charles W. Gerdts, III, General Counsel, PricewaterhouseCoopers LLP were among 21 individuals who testified during the full-day meeting. Lang’s focus was human capital. Oberly addressed issues related to firm structure and finances. And both Goldmann and Gerdts offered perspectives on profession concentration and competition. In addition, Robin G. Munden, General Counsel, Crowe Chizek and Company LLC, provided a written submission.

Later in the day, the Advisory Committee discussed a newly-released addendum to the draft report, which covers four topics: consideration of improvements to the auditor’s reporting model; engagement partner signature of the audit report; audit firm transparency; and litigation.

Reacting to the Advisory Committee's consideration of liability issues impacting the profession, CAQ Executive Director Cindy Fornelli told Bloomberg, “I’m pleased that this committee, which is charged with looking at the sustainability of the profession, recognizes that catastrophic liability is an issue that firms of all sizes face.”

The CAQ intends to submit a comment letter on the Advisory Committee’s draft report and addendum. You, too, are encouraged to share your views by visiting the Committee's comment web page.

II. A Conversation With Cindy Fornelli - Part II

The CAQ’s governance structure includes three independent board members who bring the perspectives of investors and others from outside the profession into the boardroom. They are: Harvey Goldschmid, a former SEC commissioner, and now a Columbia University law professor and senior counsel at the law firm of Weil, Gotshal & Manges; Michele Hooper, co-founder of The Directors’ Council and audit committee chair for two corporations; and Lynn Paine, a professor of business administration at Harvard Business School, whose research focuses on corporate leadership and governance.

We also work hard to include investors’ voices in our major initiatives, like the Public Dialogue Tour. We have had an investor on every panel in every city.

Additionally, we will continue to survey investors – as we did last July – so we benefit from their views on financial reporting, audit quality and the role of public company auditors in preserving the stability and transparency of our capital markets.

Going forward, we will continue to seek input from investors and work to collaborate with them on future initiatives.

Q: Is there anything about the public company auditing profession that you wish all investors were aware of?

Since joining the CAQ, I have an even greater appreciation of the dedication and seriousness with which auditors approach their work. They want to do everything they can for investors and the companies they audit to ensure trust and integrity in the auditing process. Since investors usually don’t see the process first-hand, they may not realize that auditors really do have investors at heart.

If you have a question about audit quality or the role of the CAQ, please email CAQ Executive Director Cindy Fornelli at info@thecaq.org with the subject line “Ask Cindy.”