The Washington Post finally catches on to a concept discussed here months ago – Auditors won’t lower their costs for the outside audit (which is now breaking the bank because of extra Sarbanes-Oxley testing) until they get liability reform, with or without Auditing Standard 5. They’re going to push and shove and try to pay (and PR) their way to a result that makes sense for them and them alone.
When will corporate executives and directors catch on? Just because they seem like old buddies, guys you used to work with at the old firm, someone you can trust… They’re looking out for no one but themselves now. Wake up and smell the coffee!
Sarbox and Auditor Liability
“The Bush administration alleges that fear of lawsuits is forcing accounting firms to engage in the equivalent of defensive medicine, unnecessarily driving up audit and compliance costs. The implication is that those costs would decline if auditor liability were limited.
Or would it?
The latest survey from Financial Executives International finds that the cost of complying with the much-maligned Sarbanes-Oxley regulations at large corporations dropped 23 percent last year. …One component of compliance costs that barely budged, however, was fees paid to outside auditors. …it casts doubt on whether there will really be any savings from limiting auditor liability, or whether those savings will ever make their way to investors and consumers.”