It has now been over a week since I returned from Southern California and the 2003 Midyear Conference. I am still having withdrawal symptoms—I’m not sure if they are from the superb conference that we just experienced or from Huntington Beach’s heavenly weather and natural beauty. Probably both.

The Midyear Conference was a great success. My thanks go out to Bob Ramsay, Chair of the Conference Planning Committee, and the members of the Planning Committee: Steve Glover, Doug Prawitt, Jeff Cohen, Bob Allen, Allen Blay, and Billy Soo. We had over 230 conference participants, and the feedback that I received from those in attendance was overwhelmingly positive.

The tone for the Midyear Conference was set by Friday’s plenary speaker, Phil Schimmel. Phil is the Partner-in-Charge of assurance and advisory services for KPMG’s Los Angeles region, the firm’s second largest region in the U.S. Phil shared his thoughts on “Auditing in the Post-Enron World.” Phil discussed the changes affecting the auditing profession and how the profession and KPMG are responding to these changes. Phil’s PowerPoint® slide show is available online.

The Section expanded the 2003 Midyear Conference to run for two full days rather than the day-and-a-half length of prior years. This enabled us to have a second plenary session on Saturday. The Saturday morning plenary session was one of the highlights of the conference. This plenary session was a panel consisting of Bill Kinney (The University of Texas at Austin), Chuck Noski (the recently retired CFO and Vice Chairman of AT&T), and Aulana Peters (a former SEC commissioner and retired partner of Gibson, Dunn & Crutcher). Bill is one of the premier auditing educators in the world, and Chuck and Aulana—in addition to their experiences with AT&T, Gibson, Dunn & Crutcher, and the SEC—sit on a number of corporate boards and audit committees. The title of their session was “What Lessons Have We Learned over the Past Year and Where Do They Lead Us?” Bob Ramsay, the session’s moderator, summed it up best as the session closed: “We could have stayed all day and listened to the conversation.”

In addition to the plenary sessions, there were four concurrent panel sessions. The first was a panel session on risk management, which was extremely well attended. The panelists were Lyn Graham (BDO Seidman), Bill Kinney (The University of Texas at Austin), Ira Solomon (University of Illinois), and Rick Steinberg (Partner, PricewaterhouseCoopers). Rick is directing COSO’s project to develop a framework for evaluating an entity’s risk management framework.

The second concurrent panel session was on research opportunities in internal auditing. This session was moderated by Audrey Gramling (Georgia State University), and included the nine well-known academics who wrote chapters in the recently published Institute of Internal Auditors’ (IIA) monograph, Research Opportunities in Internal Auditing. In addition to discussing the monograph, this session presented information on the IIA’s significant commitment to funding academic research in internal auditing. Please take advantage of this opportunity. Those members interested in reading the monograph can download it from: http://www.theiia.org/ecm/iiarf.cfm?doc_id=3993.

The third concurrent panel session was on communicating and disseminating research results. Rajib Doogar (University of Illinois) planned and moderated this session. The panelists were Barbara Roberts (University of Southern California), Lawrence Evans (General Accounting Office), Karen Nelson (Stanford University), and Lynn Turner (Colorado State University, and formerly Chief Accountant of the Securities and Exchange Commission). The panelists discussed ways that we can better communicate our research results to legislators, regulators, and the financial press. Given the developments of the past 18 months, the academic community may have a once-in-a-lifetime opportunity to become more involved in the policy-making process. These four panelists provided insights into how we can turn this opportunity into a reality.

The final concurrent panel was sponsored by the Section’s Education Committee, and focused on audit/assurance education for career success. The panelists were Rich Simitian (Grant Thornton), Diane Featherstone (Edison International), and Tim Lovoy (Deloitte & Touche). This session was designed to test the interest in more teaching-oriented topics at the Midyear Conference. The session was well-attended and received high marks.

No academic conference is complete without sessions for the presentation of research results, and the Midyear Conference had numerous such sessions. There were research sessions on auditor independence, resolving client audit issues, going concern, audit fees, fraud, auditor choice and IPOs, audit risk judgments, auditor quality, audit markets, auditor reporting, performance measures, information search and processing, and corporate governance. There was also a session on audit education cases.

One of my favorite aspects of the Midyear Conference is that we get to recognize and honor those members whose work and accomplishments are particularly noteworthy. The Section has five annual awards. This year congratulations go to: Ted Mock (University of Southern California) for the Outstanding Educator Award; Zoe-Vonna Palmrose (University of Southern California) for the Distinguished Service in Auditing Award; Tim Bell (KPMG) and Arnie Wright (Boston College) for the Notable Contribution to the Auditing Literature Award; Kin-Yew Low (Nanyang Technological University) for the Outstanding Auditing Dissertation Award, and Ira Solomon (University of Illinois) as Kin-Yew Low’s dissertation chair; and Ulric J. Gelinas, Jr., Elliott S. Levy, and Jay C. Thibodeau (all of Bentley College) as the inaugural recipients of the Innovation in Auditing and Assurance Education Award. I’m sure all of us in attendance at the Friday luncheon will remember Ted Mock’s and Zoe-Vonna Palmrose’s remarks upon receiving their respective awards. You can read more about this year’s award recipients elsewhere in the newsletter. I want to thank the various selection committees for their hard work in selecting such worthy recipients.

In conjunction with the Midyear Conference, the Section also sponsors a doctoral consortium. We had over 20 students in attendance, and many of these students remained for the entire conference. Every doctoral student I spoke with was extremely pleased with the quality of the consortium. Speakers included Jere Francis (University of Missouri–Columbia), Mark Peecher (University of Illinois), Zoe-Vonna Palmrose (University of Southern California), Galen Sevcik (Georgia State University), and the always popular editors’ panel, which included Bill Messier (Georgia State University), the editor of Auditing: A Journal of Practice & Theory; Terry Shevlin (University of Washington), the editor of The Accounting Review; and Dan Simunic (University of British Columbia), an associate editor at Contemporary Accounting Research and the co-editor at the Asian Journal of Accounting and Economics. My thanks to the Doctoral Consortium Planning Committee, chaired by Mark DeFond (University of Southern California) and including Ron King (Washington University in St. Louis) and Dan Simunic (University of British Columbia). Doctoral students represent the future of our discipline and of our Section, and there is no Section activity that is likely to reap as many long-term benefits for our Section as does the Doctoral Consortium.

We also offered a CPE session in conjunction with the Midyear Conference. Bill Heninger (Brigham Young University), Chair of the CPE committee, hit a home run with this year’s CPE speaker. Steve Albrecht (Brigham Young University) offered a CPE session on how we can better teach our students about fraud. Steve is a former AAA President, and one of the foremost authorities on fraud in the world. Twenty-three members attended his session, and their feedback was overwhelmingly positive.

The scope and quality of our Midyear Conference would not be possible without the generous support of the KPMG Foundation. KPMG has supported our meeting since its inception, and our Section owes the KPMG Foundation many thanks and, in particular, thanks to Bernie Milano, trustee of the Foundation, who has been a good friend to auditing educators and to our Section for many years. It is my pleasure to tell you that the KPMG Foundation has extended its commitment to fund the Midyear Conference and the Doctoral Consortium through 2006.

Let me briefly tell you about the Section’s incoming officers, the activities of the various Section committees, the Section’s financial condition, and the status of our research journal. The Section’s members voted this fall to elect a new VP–Academic (President-Elect) and a new Treasurer. We had 377 members cast votes (approximately 25 percent of the Section’s membership)—our online voting process has clearly been a huge success. My thanks to all of you who took the time to vote. The Section’s incoming VP–Academic (President-Elect) is Linda McDaniel (University of Kentucky), and the Section’s incoming Treasurer is Jeff Cohen (Boston College). Linda and Jeff will assume their positions at the Section’s luncheon at the AAA Annual Meeting this August in Hawaii.

The Section has 17 committees, many of which exist to select award recipients and to plan the Midyear Conference, Doctoral Consortium, and portions of the AAA Annual Meeting. In addition, the Section has five committees through which much of the Section’s work is done. These committees are the Auditing Standards Committee, Communications Committee, Education Committee, Membership and Regional Coordinators Committee, and Research Committee. The chairs of each of these five committees made brief reports at the Section’s business meeting.

The Section’s Auditing Standards Committee (chaired by Brian Ballou, Auburn University) has been very active because of the current state of the regulatory environment. This committee has drafted a number of comment letters on SAS Exposure Drafts. The Auditing Standards Committee has put a link to these comment letters in this issue of The Auditor’s Report so that you can read their comment letters if you are interested. This committee also developed the panel session on risk assessment that was so well received at the Midyear Conference.

The Communications Committee (chaired by Jeff Payne, University of Oklahoma) is pursuing a number of initiatives, including making a recommendation to the Executive Committee on how the content and functionality of the Section’s website can be improved.

The Education Committee (chaired by Don Tidrick, Northern Illinois University) has aggressively sought out teaching- and practice-related resources that can enhance our effectiveness in the classroom. These resources are shared with the membership through the column in The Auditor’s Report, “Have You Seen These Educational Resources?” This committee also developed a panel session on audit/assurance education for career success for the Midyear Conference.

The Membership and Regional Coordinators Committee (chaired by Bob Tucker, Fordham University) has a number of initiatives under way. These initiatives involve trying to increase our membership, both among current faculty and Ph.D. students. This committee is also working to improve the auditing-related content at the various regional meetings. I am aware of exciting speakers and/or panels being developed for a number of the regional meetings this Spring. For more details, I suggest that you contact the respective regional coordinator (listed on the Section’s website under “Officers and Committees”).

The Research Committee (chaired by Steve Salterio, University of Waterloo) is working to provide members with information on how to effectively gain access to subjects and proprietary data, as well as resources for retooling one’s research skills. Look for future articles in The Auditor’s Report and future panel sessions at Midyear Conferences on these initiatives. At the recently completed Midyear Conference, this committee sponsored the panel session on communicating and disseminating research results.

All of the Section’s committees are quite active, and whatever the Section is able to accomplish is really a testament to the large number of members serving behind the scenes. I thank all of the Section members serving on one or more of our committees for their hard work.

Unlike last year, the financial condition of the Section has improved markedly. The Section’s cash balance has improved from $15,384 at 8-31-01 to $54,701 at 8-31-02, and our cash balance at the end of 11-30-02 (the first quarter of our FYE 8-31-03) is $87,582. We all owe our thanks to Mike Bamber (the Section’s Past President) and Rick Tubbs (Treasurer) for leading us to take the actions necessary to solve the Section’s structural cash flow problem. It appears that our Section is on solid financial footing for the foreseeable future.

Bill Messier (Georgia State University) assumed the editor’s role of Auditing: A Journal of Practice & Theory in the summer of last year. Bill’s editor’s report appears elsewhere in this newsletter. The number of submissions, turnaround time, and number of articles published reflect the great commitment of Bill and his associate editors, Mark DeFond (University of Southern California), Hun-Tong Tan (Nanyang Technological University), and Rick Tubbs (The University of Iowa), as well as the journal’s prior editor, Arnie Wright (Boston College) and his editorial team. Bill has recently added a fourth associate editor, Kannan Raghunandan (Texas A&M International), because of the large number of archival-based submissions that the journal is receiving. One of the reasons that the Section has recovered from its financial difficulties so quickly is Bill’s decision to forgo most of the stipend that the Section has traditionally provided the editor. Thank you, Bill!

Let me close by briefly telling you about two initiatives that the Executive Committee is pursuing. The Executive Committee believes that it is in the best interest of both the Section and the new Public Company Accounting Oversight Board (PCAOB) for our two organizations to have a close working relationship. We have had contact with the PCAOB as to what this relationship might look like. I hope to provide you with further details on this initiative at the AAA Annual Meeting.

The 25th anniversary of Auditing: A Journal of Practice & Theory will be upon us in a couple of years. We are exploring the possibility of sponsoring an AJPT research conference to commemorate the journal’s 25th anniversary. A preliminary planning committee, chaired by Jean Bedard (VP–Academic), is examining the feasibility of such a conference and will make a recommendation to the Executive Committee by this Spring. Again, I hope to give you more details on this initiative in Hawaii.

Speaking of Hawaii—I hope to see you there. Bryan Church (Georgia Tech) is the Section’s liaison to the AAA Annual Meeting Planning Committee, and Bryan tells me that the Auditing Section received 99 paper submissions and one special session proposal. These numbers represent an increase of approximately 30% from last year’s numbers. I envision many excellent auditing-related sessions in Hawaii, and we will certainly host the Section’s traditional Monday lunch.

I enjoyed seeing many of you at the Section’s Midyear Conference, and for those of you who were not in Huntington Beach, I hope this report gives you a sense of the continued vibrancy and activities of your Section.