{"id":39617,"date":"2022-07-05T08:28:08","date_gmt":"2022-07-05T01:28:08","guid":{"rendered":"https:\/\/www.princess-it-foundation.org\/pbl\/?p=39617"},"modified":"2022-07-05T08:28:05","modified_gmt":"2022-07-05T01:28:05","slug":"i-think-a-better-place-for-it-is-in-notes-to-the-2","status":"publish","type":"post","link":"https:\/\/www.princess-it.org\/pbl\/?p=39617","title":{"rendered":"I think a better place for it is in notes to the financial statements or in the 10-K"},"content":{"rendered":"I think a better place for it is in notes to the financial statements or in the 10-K<\/title><\/p>\n<p>It is information that has some relevance to investment decisions but has very little or only quite tangential relevance to voting decisions.<\/p>\n<p>Secondly, scope of services. I guess I have a less judicial — I certainly have a less judicial temperament, I’m sure, than Chairman Allen, and so I’m willing to be less agnostic than <a href=\"https:\/\/installmentloansindiana.org\/cities\/lagrange\/\">installment loan stores in Lagrange<\/a> he about the proposed rules relating to scope of services.<\/p>\n<p>I think that they represent a very thoughtful, rationale, coherent set of proposals. I’m sure they’re notperfect. I’m sure that the Commission, as a result of the process that you’re going through, will improve on them, but I think that they are an excellent starting point and recognize some very real problems that have been developing.<\/p>\n<p>I do believe that there are costs imposed by some of these rules. I’ve been in the role of making judgments of places where one-stop shopping was an advantage and places where I thought it wasn’t an advantage.<\/p>\n<p>I think that in a market economy that’s highly competitive any time services are being acquired in a particular way that suggests that the participants in the economy have found advantages either of cost or quality or both in the way those services are being provided.<!--more--><\/p>\n<p>The area that I find it easiest, perhaps, to think about is internal audit out-sourcing. I’m not an opponent of out-sourcing in general. I think there certainly are circumstances where the company isn’t large enough to have a substantial enough internal audit function of its own employees so that it makes sense to out-source.<\/p>\n<p>But I can’t imagine a situation where, as a memberof an audit committee or as a member of management, I would want to out-source to the accounting firm that was doing my audit.<\/p>\n<p>The internal auditor is a part of the management team. He or she is identifying problems and providing reports that help management correct those problems, and you can’t have that kind of integration with management, I think, without losing the objectivity that is needed to do the attest function.<\/p>\n<p>So on that one I’d be willing to call that now and say that accounting firms just shouldn’t do that for audit clients.<\/p>\n<p>On the issues of employment with audit clients, financial interest, family relationship, which are issues that the ISB has been addressing, I join Chairman Allen in encouraging the Commission to consider looking to the rules that the ISB has developed or is well along in developing in these areas.<\/p>\n<p>The differences between what the ISB has proposed and the Commission proposal are, in my view, quite minor. I don’t think any of them are the kind of things that a good reporter could get a paragraph out of for a story, much less an article or, more importantly, that would cause an investorto change their view one way or the other in reliance on audited financials.<\/p>\n<h2>Good internal auditing, in my experience, requires the internal auditor to be very closely integrated with management<\/h2>\n<p>If there’s going to be an ISB process — and there doesn’t have to be one, but if there’s going to be an ISB process, I think it’s worth considering the consequences of placing the ISB in the role of proposing only.<\/p>\n<h2>I think, though, in most and, perhaps, all the cases that the Commission addresses in this proposal those costs are more than justified by the benefits<\/h2>\n<p>If all the ISB does is propose, and then the Commission and the Commission staff takes that, perhaps is influenced by it but changes it in various details, it’s going to be hard to get serious people to spend serious time thinking and working hard on those issues.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>I think a better place for it is in notes to the financial statements or in the 10-K It is information that has some relevance to investment decisions but has very little or only quite tangential relevance to voting decisions. Secondly, scope of services. I guess I have a less …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-39617","post","type-post","status-publish","format-standard","hentry","category-form","column","threecol"],"_links":{"self":[{"href":"https:\/\/www.princess-it.org\/pbl\/index.php?rest_route=\/wp\/v2\/posts\/39617","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.princess-it.org\/pbl\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.princess-it.org\/pbl\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.princess-it.org\/pbl\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.princess-it.org\/pbl\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=39617"}],"version-history":[{"count":1,"href":"https:\/\/www.princess-it.org\/pbl\/index.php?rest_route=\/wp\/v2\/posts\/39617\/revisions"}],"predecessor-version":[{"id":39618,"href":"https:\/\/www.princess-it.org\/pbl\/index.php?rest_route=\/wp\/v2\/posts\/39617\/revisions\/39618"}],"wp:attachment":[{"href":"https:\/\/www.princess-it.org\/pbl\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=39617"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.princess-it.org\/pbl\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=39617"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.princess-it.org\/pbl\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=39617"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}