James Schnurr, Securities and Exchange Commission Chief Accountant believes that public audit quality is improving overall but believes there is still room to improve.
While inspection comments for large and second-tier businesses have been on the rise over the past seven years, Schnurr says that does not mean audit quality is deteriorating. The increased comments are a reflection of a more mature inspection process. “Also the bar for audit quality continues to move up,” he stated.
Some firms are beginning to see a decrease in inspection comments, but Schnurr warns them not to become complacent. He urged auditing firms to monitor their growth of consulting and advisory practices, especially at larger firms. He says that larger firms tend to have “scope creep,” providing prohibited services. He stresses the importance of having a system to verify non-audit services before approving them.
After speaking on audit advice, Schnurr went on to review 2015 in an interview with Accounting Today, praising the staff of the Securities and Exchange Commission during his inaugural year as chief accountant. He expressed confidence in the personnel stating that their focus on protecting their investors was laser-sharp, stressing their overall dedication.
Schnurr then pointed out several of the achievements of his office during 2015 including:
- Advancing transparency with the Public Company Accounting Oversight Board
- Identifying issues in implementation of the new revenue recognition standards.
- Analyzing International Financial Reporting Standards for better understanding in the United States and the world.
- Rolling out changes to audit committee disclosures.
SEC agenda items for the 2016 year include the following:
- Pinpointing implementation issues before the credit impairment standard is rolled out.
- Accelerating timeliness of the Public Company Accounting Oversight Board (PCAOB) standard releases.
Schnurr wrapped up the interview stressing the importance of firms meeting professional obligations and his organization’s commitment to maintaining these standards.