Treasury’s Advisory Committee on the Auditing Profession has just released a
discussion paper on the first meeting of an inquiry intended to produce
recommendations to restore credibility in the auditing profession following a
raft of auditing scandals earlier this decade.
On the release of the
paper, committee chairman Arthur Leavitt, former chairman of the Securities
and Exchange Commission, said the auditor’s responsibility to search for fraud
would be a major issue examined by the committee. He said the demise of Arthur
Andersen earlier in the decade showed the vulnerability of auditors if they did
not do this job better.
The committee will also examine market concentration and its impact on audit
quality as well as the possible need for public policy change dealing with a
lack of competition. The white paper noted the biggest auditing firms audited
more than 78% of public companies, and 99% of public company revenue.
In addition, the committee is also expected to devote considerable time to
find ways of helping the auditing profession attract and retain qualified
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