'The profession is better managed today than ever before. But once again, this is a moving target' - Levitt
Former SEC chairman Arthur Levitt has suggested that the market has place for
an ‘audit only’ firm.
In an interview with Dutch magazine de Accountant, Levitt said that
in order to mitigate the risk of an Andersen-like collapse of the one of the Big
Four, the US Treasury’s Advisory Committee on the Audit Profession will propose
‘a custodial arrangement whereby if a major firm gets into trouble the PCAOB
will have the ability to take it over and, almost in a bankruptcy mode, run the
firm in an orderly way.’
Speaking about the factors behind the subprime credit crises, Levitt said
that unlike the late nineties, auditors were ‘not at the head of the pack of
wrongdoing’ this time.
However he said there was still room for reform of the profession.
‘The profession is better managed today than ever before. But once again,
this is a moving target. The firms are aggressively getting back into consulting
services. I think there is a role for an audit only firm… We also need greater
transparency, to understand what condition a firm is in. We need the firms to
provide fully documented audits of their own operation. They don’t do it at the
present time, but I think that clearly is coming,’ Levitt said.