{"id":94,"date":"2009-02-24T22:35:57","date_gmt":"2009-02-25T04:35:57","guid":{"rendered":"http:\/\/cfo.markbaileyco.com\/?p=94"},"modified":"2009-02-24T22:35:57","modified_gmt":"2009-02-25T04:35:57","slug":"e-y-calls-for-more-regulation-more-cost","status":"publish","type":"post","link":"https:\/\/www.excelsisaccounting.com\/blog\/index.php\/2009\/02\/24\/e-y-calls-for-more-regulation-more-cost\/","title":{"rendered":"E & Y Calls for More Regulation (More Cost)"},"content":{"rendered":"

In a speech<\/a> at the Commonwealth Club in San Francisco recently, EY CEO James Turley called for more regulation of audit firms.\u00a0 His premise that audit quality has improved as a result of SOX and the PCAOB while ‘possibly’ accurate (and I’m not conceding that) is irrelevant.\u00a0 Foremost I don’t believe that quality has improved for quality firms.\u00a0\u00a0 I can’t speak for EY.\u00a0 Perhaps they are better for it.\u00a0 The SEC and the\u00a0 PCAOB for all intents and purposes\u00a0 initially\u00a0 adopted the accounting and internal control standards that were already promulgated by the profession.\u00a0 Adding another layer of regulation sufficed only in adding additional cost to public companies.\u00a0 And now Mr. Turley wants to expand that further.\u00a0 Why?<\/p>\n

Since my introduction to the profession in the 1970’s when we were attacked by Michigan Democratic Congressman John Dingell, we have fought for self regulation.\u00a0 Obviously the SEC Practice Section of the AICPA (the forerunner to the Center for Audit Quality CAQ) failed miserably and here we are.\u00a0 Based on his leadership, it appears the CAQ is on the same course. \u00a0 One of the defining characteristics of any\u00a0 profession is self regulation<\/strong>.\u00a0 So we apparently have failed as a profession if you are to subscribe to Mr. Turley’s pleading or does he have another motive?<\/p>\n

Economists define this propensity of larger firms ‘getting cozy’ with regulators in order to drive up costs and limit competition from smaller firms as ‘regulatory capture’.\u00a0 Banks, drug companies, airlines – accounting firms?\u00a0 Bigger isn’t better, but it certainly seems to be more expensive.<\/p>\n

From my days as a young corporate bank officer for a mid-sized California bank in the early 1970’s, I recall having regulatory audits by Federal regulators, the State of California examiners, and the Federal Depositors Insurance Corporation (FDIC).\u00a0 We also had our own internal audit department as did every other bank.\u00a0 And as every other bank has had since then.\u00a0 Total regulation.\u00a0 It’s obviously worked well Mr. Turley.\u00a0 In my professional lifetime a list of the most heavily regulated industries would include banks, airlines, railroads,\u00a0 banks, banks, banks. \u00a0 More regulation.\u00a0 Yeah!\u00a0 That’s the answer.<\/p>\n

More recently we have two great examples of failures by\u00a0 federal regulation in Madoff and Stanford.\u00a0 I challenge you to name one economy with more regulation than we have had in the US that has been more successful.\u00a0 Ever.\u00a0 I can list dozens that failed with more regulation.<\/p>\n

I disagree vehemently with Jim Turley.\u00a0 Additional regulation if warranted should come from inside the profession – specifically the CAQ which Mr. Turley happens to be the sitting Chair of.\u00a0 Do the job you signed on for with the CAQ Mr Turley. \u00a0 That he wants to abdicate that responsibility is incredibly disturbing.\u00a0 That he proposes to add additonal layers of cost – cost that he and his firm will derive revenue\u00a0 directly from- is unconscionable.<\/p>\n","protected":false},"excerpt":{"rendered":"

In a speech at the Commonwealth Club in San Francisco recently, EY CEO James Turley called for more regulation of audit firms.\u00a0 His premise that audit quality has improved as a result of SOX and the PCAOB while ‘possibly’ accurate (and I’m not conceding that) is irrelevant.\u00a0 Foremost I don’t believe that quality has improved … Continue reading “E & Y Calls for More Regulation (More Cost)”<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[60,63],"tags":[57,58,59,61,62,6,64,56,65,66,67],"class_list":["post-94","post","type-post","status-publish","format-standard","hentry","category-business-environment","category-governance","tag-accounting-firms","tag-aicpa","tag-audit-quality","tag-congressman-john-dingell","tag-controller","tag-derivatives","tag-internal-audit-department","tag-pcaob","tag-regulatory-audits","tag-sec-practice-section","tag-self-regulation"],"_links":{"self":[{"href":"https:\/\/www.excelsisaccounting.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/94","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.excelsisaccounting.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.excelsisaccounting.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.excelsisaccounting.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.excelsisaccounting.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=94"}],"version-history":[{"count":0,"href":"https:\/\/www.excelsisaccounting.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/94\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.excelsisaccounting.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=94"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.excelsisaccounting.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=94"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.excelsisaccounting.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=94"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}