I read with interest the two opinion pieces on "While Auditors Watch Clients, Who Should Watch Auditors?" (Viewpoints, March 9). Both viewpoints missed the mark in addressing the fundamental issues for improving the quality of audits in America. I believe the following steps are fundamental to improving the quality of audit performance:
- Increase the consequences and timeliness of sanctions for malpractice. My experience in serving on professional ethics committees in two states points out that seldom is severe punishment meted out, and, when it is, the process can be dragged out for as long as 10 years--equal to almost a third of a professional lifetime.
- Reverse the deregulation of the accounting profession. A recent study by the General Accounting Office of audits of agencies receiving federal funds reveals that 45% of such audits by firms with fewer than 50 partners were deficient. Yet the primary criterion for selecting auditors is price, a practice escalating since the abolition of the prohibition against competitive bidding. Hearings being held by Rep. John D. Dingell (D-Mich.) could lead the public to believe that he is concerned about "audit failures," but the committee is dealing with some minor issues and not dealing with some critical issues such as the procurement of accounting services. Dingell should be aware of the maxim, "You get what you pay for." Audits of government agencies are no exception.
- Establish a national certified public accountant certificate and license to practice with uniform national requirements. Currently, requirements to practice vary among the 50 states from zero to three years of professional experience. Continuing professional education requirements vary greatly. Audit standards and the practice of commerce know no state boundaries. While state licensing of attorneys can be justified on the grounds of the vagaries of state laws, no similar case can be made for CPAs.
- Increase educational requirements for public practice. The complexity of commerce, computer systems, and professional standards has increased enormously in recent years. The public interest is best served by CPAs who have a firm liberal arts background; understand the basics of business, including the concepts of business risks, who have a grasp of the professional standards, and who can apply professional judgment. As the legislatures of three states have come to recognize, a minimum of five years of education is needed for the public to be served adequately. We must move aggressively in upgrading the education requirements to practice before the public.
Action on these four issues can begin to address the underlying causes of audit failings. All else is dealing with the symptoms.
Doyle Z. Williams
Dean, School of Accounting
University of Southern California