PCAOB chief urges more ‘professional skepticism’

Mark Olsen, Public Company
Accounting Oversight Board
(PCAOB) chairman, told USA’s CPAs at their
National Conference on Current SEC/PCAOB Developments, the risk of financial
fraud tended to increase during tough economic times, and that if anything,
auditors needed to exert more ‘professional skepticism’ when auditing corporate
financial statements during the current economic downswing.

The PCAOB chairman predicted the current economic climate would require
auditors to take a hard look at areas auch as the collectibility of receivables,
potential inventory obsolescence, and the impairment of other assets, including
deferred taxes and goodwill, the WebCPA reports.

Olson reminded auditors they should always act with the ‘due care and
professional skepticism required by PCAOB standards – particularly when faced
with a client’s interests in avoiding correction of earnings announcements and
in meeting filing deadlines’.

However, he found one advantage in the current financial crisis, saying
today’s tough market conditions provide ‘a historic opportunity’ for the US
Congress and the incoming administration to strengthen USA’s financial system
and rethink its financial regulatory framework.

Further reading:

the WebCPS story

Related reading

Fiona Westwood of Smith and Williamson.