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PwC Charts the "Off" in Public Offerings

I'm always watching the IPO market because it directly relates to our business.

This PwC study is encouraging given the current recession (yes, I said the 'r' word).

PCAOB Finds Fault with E&Y

According to the LA Times, Ernst & Young, one of the four biggest US accounting firms, didn't catch errors that were probably relevant to companies' financial statements and failed to perform some required procedures in the audits it conducted, the federal regulator that oversees accounting firms said Wednesday.

The Public Company Accounting Oversight Board's findings arose from its 2006 review of the firm's audits. The board was created under the 2002 Sarbanes-Oxley law.

An Ernst & Young spokesman, in response to the report, said the inspections offered "important feedback to the profession."

If I were an E&Y client, I would not be alarmed by this headline.  I bet the other Big 4 firms received similar comments from the PCAOB.  The important thing is that there is a process to review what the accounting firms are doing. 

US Auditor Concentration Study

Remember my comment about public companies in the US having too few choices in independent auditors?   The CEO of Grant Thornton (an accounting firm) apparently has similar thoughts.  Edward Nusbaum called for an auditor concentration study in the U.S., recognizing that "more accounting firms means greater competition and increases quality and lowers costs to the end user."

Proposal to Allow IFRS for SEC Filings

The SEC will propose to allow foreign issuers to file financial reports using either international financial reporting standards (IFRS) or U.S. generally accepted accounting principles (US GAAP).  Under current SEC rules, foreign private issuers that report in IFRS, or in any other non-U.S. standard, must reconcile their financial statements to US GAAP when filing reports with the commission.  The SEC's upcoming proposal would remove that requirement for foreign companies beginning in 2009.  If this does happen, it will be a huge step for foreign companies. 

The question US companies are asking is whether they can use IFRS instead of US GAAP.  If the SEC allows US companies to use IFRS, it will be a huge change for the public accounting industry.  CPAs with IFRS knowledge will be in great demand.

KPMG Sues Fannie Mae

It'll be interesting to see how the case between KPMG and Fannie Fae unfolds.  As a result of how the government treated Arthur Andersen (it filed bankruptcy before its fraudulent client, Enron, did), we now have a oligopoly of tier 1 accounting firms who serve publicly traded companies.  I seriously doubt that the government will harshly punish another Big 4 for fear that the firm will collapse.   As it is, there are too few choices in independent auditors for public companies now.