I made another guest post at the blog for Financial Executives International. My BBF (best blogger girlfriend) Edith Orenstein is on vacation. The post is cross-posted over at accountingWEB, because Edith is so good and so popular. She’s been my go-to girl for a while when it comes to technical accounting support and general navigation around the accounting world acronyms such as FASB, IASB, FAF, COSO, and IASCF.
How many of those do you know?
I had a long chat with a reporter last night about the role of the audit committee when it comes to hiring, firing and monitoring the auditor. The reporter told me that audit committee members tell her they’re not worried about fees but about the quality of the auditor.
That may be true, but what happens when a non-accountant, non-CPA investment banker is the CFO? You can bet your bottom dollar he’s less interested in answering questions about GAAP than he is about paying as little as possible for the piece of paper that allows him to go out and raise more capital.
In these recessionary days, how does an audit committee respond to that kind of pressure from the C-suite?
I don”t know what really happened at American Apparel. The reports say Deloitte resigned. If Deloitte saw a huge risk in the thirty-one year old dilettante CFO and cut their losses, well, good for them.
Do you remember the last time we had a high-profile non-CPA CFO trying to sort out serious accounting issues?
Does the name Erin Callan mean anything to you?
In retrospect, it is easy to see the error of her ways for taking the job and of Lehman’s management for appointing her. What public company, of the size and stature of Lehman, in trouble already, can afford to have a CFO who is not an accountant? Have we not seen what happens when a CFO has no interest or aptitude for GAAP? A seasoned CPA CFO – not Mr. Kowalewski – would have known that an auditor resignation over “controls” could lead to lots of questions. Auditor resignations also eventually lead to lots of litigation if there’s a sudden stock price drop that accompanies them.
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