The Auditors Report

Report of the President

Urton Anderson
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Views from the Profession: The Path Toward a Single Set of Global Auditing Standards

Fraudulent Financial Reporting: 1998-2007

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PCAOB Update

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Fall 2010 Issue Deadline

The deadline for material to be included in the Fall 2010 issue of The Auditor's Report is September 30, 2010. The preferred format is a Word file attached to an e-mail message. We are also open to any proposals for materials that anyone would like to submit. Please send all material and proposals to the incoming Editor at the address below by September 30, 2010, to ensure timely publication of the issue:

Gary Peters, Editor
Sam M. Walton College of Business
Department of Accounting
University of Arkansas
Business Building 448
1 University of Arkansas
Fayetteville, AR 72701-1201
gfpeters@walton.uark.edu

Mark PeecherIt has certainly been an interesting decade to be a student of the auditing profession this past decade. The decade began with the audit of financial statements as “loss-leader” for public accounting firms, saw a cataclysmic change in the structure of the profession with Sarbanes-Oxley and the creation of the PCAOB, experienced another wave of corporate scandals and a constitutional challenge to the PCAOB, and ended with The Supreme Court going to great lengths to preserve Sarbanes-Oxley and the PCAOB. To put the importance of the Court’s decision in perspective I quote the June 28 joint statement by former Congressman Michael Oxley and former Senator Paul Sarbanes:

The PCAOB provides essential protections to the more than half of American households that invest savings in securities. It ensures the integrity of public company audits and, thereby, the accuracy of financial reporting. The PCAOB enjoys widespread support from investors as well as from the accounting profession. The decision from the Supreme Court adjusts the law in a way that allows the PCAOB to continue to ensure the integrity of public company audits. The Board's essential protections of American investors will continue.

As reminder of just how big a change has taken place, I refer you to the excellent article in Current Issues in Auditing by Bill Gradison and Ron Boster, “The PCAOB’s First Seven Years: A Retrospection,” (Volume 4, Issue ,1 2010, Pages A9–A20), available at the Section’s website.

The decade’s changes and challenges to the auditing profession are certainly reflected in the extensive and dynamic program that Kenny Reynolds and Karla Johnstone have put together for the 2010 AAA Meeting in San Francisco. I don’t recall ever seeing so many sessions – my quick count of the preliminary program indicates 50 session with two or more auditing papers and 10 panel sessions on auditing topics. In addition to these sessions we will also have Berry Salzberg, CEO of Deloitte for the section’s luncheon speaker on Monday.

Audit Boot Camp
Thirty-five participants attended our Second Audit Educator’s Bootcamp which was held June 15-17 at DePaul University. As in prior years the demand exceeded the number of spots and we had to close registration prior to the deadline. Reports from participants again rated the program as extremely valuable. Thanks to Jay Rich and Ray Whittington for their excellent work in planning and coordinating the event and to Frank Buckless, Scott Showalter, and Jay Thibodeau for instructing.

We have heard from a number of you that you need the date set earlier so that you can plan your summer activities. We are planning to have a Third Bootcamp next summer in Chicago, probably about the same time period in June. This year we will try to get the date set in early September.

Strategic Plan for the Section
As reported in our last news letter, the Executive Committee, in conjunctions with support from AAA, has begun a formal strategic planning process. This effort is being led by Steve Glover, who will assume the Section’s Presidency August 2, and Scott Showalter, our new Vice President/Academics and President Elect. In addition to the current executive committee members (Shaun Budnik, Audrey Gramling, Chris Hogan, Linda McDaniel, Jay Thibodeau, and myself) several members from the section-at-large were asked to join the Section’s Strategy Team. These members are Brian Ballou (Miami University), Mark Beasley (North Carolina State), Jeff Cohen (Boston College), and Ray Whittington (DePaul University). Dale Karren and Jan Brown from Petrous have provided excellent facilitation and support for the process.

We began the formal process in March and have made excellent progress using the framework and process provided by Petrous. This has included numerous conference calls and a two day meeting held June 9 and 10.  To date the strategy team has done a thorough analysis of the section’s current status; identified strengths, weakness and opportunities; clarified the section’s value proposition, developed a vision and a mission statement; and set out five strategic initiatives. Currently we are in the process of developing specific action steps to implement these strategic initiatives along with specific measureable goals and timelines. We hope to complete this part of the process in August and have the plan ready for role out to the section prior to the January Midyear Meeting in Albuquerque.

Executive Committee Changes
At the August AAA meeting Audrey Gramling (Past-President), Jay Thibodeau (Secretary), Shaun Budnik (Vice President/Practice), and Linda McDaniel (Historian) will rotate off the executive committee. I wish to thank each of these individuals for the work they have done for the section and their willingness to extend their efforts beyond their term as they continue the work on the section’s strategic plan and its implementation.

I would also like to welcome the newly elected officers of the section. They are:

D. Scott Showalter, Professor of Practice, North Carolina State University - VP Academic
Walton Conn, Global Head of Audit Methodology and Implementation, KPMG LLP - VP Practice
Jennifer Joe, Associate Professor of Accountancy, Georgia State University – Secretary.
Scott has already been heavily involved with the section these past few months as he and Steve Glover have been leading the section’s strategic planning efforts.

People to Serve on Nominations Committee
Following the recent change in the Section's by-laws, we are announcing a call for nominations for the 2010 – 2011 Nominating Committee. Please consider nominating yourself or another member of the Auditing Section. The Nominating Committee’s duties include soliciting candidates from the membership for open offices and preparing a slate of at least one candidate for each of the open offices. Consider becoming involved in selecting the next leaders of the Auditing Section. Additional details on the by-laws change, and the responsibilities of the nominating committee, are available online. Nominations for the Nominating Committee should be submitted to Audrey A. Gramling by July 15, 2010, at agramli1@kennesaw.edu.

2011 Auditing Section’s Midyear Conference in Albuquerque
Even though you haven’t gotten to the AAA Annual Meetings yet, it is not too early to plan for your submission of papers and panel sessions for the 2011 Midyear Meeting to be held January 13-15 in Albuquerque New Mexico. Program co-chairs Scott Vandervelde and Mike Wilkins are already at work in setting up plenary speakers and will soon be soliciting papers and proposals for panel sessions. So while you are talking with your colleagues in San Francisco and come up with that perfect session, let Scott and Mike know about it.

Finally, our section gives out numerous awards at our Midyear Meeting, but the selection process starts in a few weeks. The information about the awards and how to make a nomination can be found at http://aaahq.org/audit/awards.htm. The Section gives awards in research, education and service to the auditing profession. Consider nominating a colleague, mentor, teacher, PhD student or even yourself. Nominations are due July 15, 2010.

I will end by noting what a great privilege it has been to serve as the Section’s President this past year. I continue to be amazed by the extent of the dedication so many of you members have shown to the work of the section in its mission to further the auditing profession through research and teaching. This certainly includes the members of the executive committee, the committee chairs and vice-chairs, editors, and the committee members; but also the membership as a whole. Whenever tasks need to be done, I never had to look far before finding someone to step up. I, however, would like to express my special thanks to Audrey Gramling and Steve Glover. To Audrey, for excellent job she did over her past three years as Vice President/Academic, President, and Past President. The discipline, organization and order she brought to the section’s operations will be a legacy to the section for the years to come. To Steve, for his willingness to undertake the leadership for the strategic planning, a monumental task.