Volume 5, Issue 12

December 2011

I. Anti-Fraud Collaboration Releases New Fraud Literacy Quiz

The Center for Audit Quality (CAQ) and three other organizations representing key participants in the financial reporting supply chain have reaffirmed their commitment to a collaborative effort to deter and detect financial reporting fraud by announcing the introduction of a new Fraud Literacy Quiz.

Financial Executives International (FEI) unveiled the Fraud Literacy Quiz during a November 14 media briefing attended by representatives of all four collaborative partners – FEI along with the CAQ, The Institute for Internal Auditors (The IIA) and the National Association of Corporate Directors (NACD).

“Our four organizations are very excited about this latest step on the path toward enhanced deterrence and detection of financial reporting fraud,” CAQ Executive Director Cindy Fornelli explained. “We are engaged in a number of projects at the moment, and you will see us make significant contributions to anti-fraud tools, training and awareness programs in the months and years to come.”

Participating in the anti-fraud collaboration’s briefing were (left to right): NACD Board Member Peter Clapman; The IIA’s Vice President of North American Services, Hal Garyn; FEI President and CEO Marie Hollein; CAQ Executive Director Cindy Fornelli; and CAQ Governing Board Member and NACD Board Member Michele Hooper.

The Fraud Literacy Quiz, which is open to the public, comprises a series of questions designed to assess an individual’s knowledge on topics related to deterring and detecting financial reporting fraud. In addition, a feature article in the November issue of Financial Executive magazine, titled “Financial Reporting Fraud: Prevention Starts at the Top,” is available online at http://www.financialexecutives.org/fly/Fraud_Literacy_Mag. FEI is offering free CPE credit to members and nonmembers who read the article and successfully answer questions about its content.

“Risk management and ethical issues continue to be ongoing concerns for executives in the financial community, and impact companies’ boards and C-suites as a whole,” said Marie Hollein, president and CEO of FEI. “We are excited to continue our collaboration with the CAQ, The IIA, and the NACD to highlight this important issue.”

The online quiz, building on an anti-fraud platform announced last year, is the first in a series of tools and programs for professionals involved in financial reporting. Michele Hooper, a CAQ Governing Board member and NACD Board Member who spearheaded the CAQ’s anti-fraud initiative, noted that forthcoming projects will “increase stakeholder awareness, elevate the understanding of the responsibility [for fraud deterrence and detection] and improve individuals’ awareness” in this area.

II. CAQ Seeks Auditing-Related Academic Research Proposals

The CAQ has issued a request for proposals (RFP) to fund independent academic research on projects relating to the public company auditing profession.

Areas of interest for 2012 include:

• Additional auditor disclosures: If auditors are required to disclose information beyond that contained in the current pass/fail auditor’s report, what effect would it have on management practices, auditor-audit committee communication, audit planning and execution?
• Investor information needs: What information is important to investors? Who do investors think is best suited to provide that information? If it is determined that the issuer is in the best position, do investors want some level of auditor association, and if so, what level of association?  What choices or trade-offs would investors be willing to make to obtain the desired information?
• Independent auditor workforce development: In terms of attracting and retaining the next generation of independent auditors, how can we assess existing concerns and identify factors leading to profession departures? Further, what impact would potential changes in the auditor’s role have on the profession’s ability to attract and retain talented individuals?

The number of projects selected for funding will depend on the relevance and quality of proposals received and the total dollar amount of funds requested.  The CAQ anticipates making available a total of up to $200,000 to fund multiple projects in 2012. To be considered, proposals should be received by 5:00 p.m., Thursday, March 1, 2012. Questions regarding the RFP should be submitted to Margot Cella, Director of Research, at researchproposals@thecaq.org. 

III. Fornelli Named to Financial Accounting Standards Advisory Council

The Board of Trustees of the Financial Accounting Foundation (FAF) on November 18 announced the appointment of Cindy Fornelli to the Financial Accounting Standards Advisory Council (FASAC) effective January 1, 2012.

Fornelli is among thirteen new FASAC members.

The FASAC is responsible for advising the Financial Accounting Standards Board (FASB) on technical issues, project priorities, and other matters that affect accounting standard setting.

Members of the FASAC are chosen from a cross-section of the FASB's constituents, including users, preparers, practitioners, associations, academics, and other parties interested or involved in financial reporting. FASAC members are chosen based on their professional expertise and their ability to broaden the base of constituent views on the Council.

"We're very pleased to welcome our new members to the FASAC," stated Dennis Chookaszian, chairman of the FASAC. "Each of these individuals has excelled in their specific stakeholder community and their varied perspectives will be integral to FASB and the standard-setting process."

IV. Profession Representatives Among Appointees and Reappointees to PCAOB’s Standing Advisory Group

On November 29, the Public Company Accounting Oversight Board (PCAOB) announced 28 new and re-appointed members to its Standing Advisory Group (SAG).

Bruce Jorth, Executive Partner, National Office of Risk Management, McGladrey & Pullen LLP, is among the new appointments to the SAG. SAG reappointees include John (Arch) Archambault, Senior Partner, Professional Standards and Global Public Policy, Grant Thornton LLP; Michael Gallagher, Assurance Partner and U.S. Assurance National Office Leader, PwC; Wayne Kolins, Partner, BDO USA, LLP and Global Head of Audit and Accounting, BDO International Limited; and Kevin Reilly, Americas Vice Chair, Professional Practice and Risk Management, Ernst & Young LLP.

Gallagher, Kolins and Reilly are members of the CAQ’s Professional Practice Executive Committee (PPEC). Gallagher serves as PPEC chairman.
 
 “We continue to find our SAG to be an important source of insight and advice and we are enlarging it to give us an even larger pool of experts from which to draw," said PCAOB Chairman James Doty.

SAG membership is drawn from the fields of accounting, auditing, financial reporting, corporate finance and corporate governance, as well as institutional investors.