Waypoints: Ideas and Insights to Navigate Enterprise Complexity

Like most businesses, we’re constantly seeking to improve our services. The biggest change we’re anticipating and planning for is automation of audit and internal audit services. There is a lot of discussion about how this development will impact the profession. But we’ve noticed that very little has been written about the impact of these changes to our clients. As we develop and deploy new technology for our audit projects, how will our services and delivery to you change?

Each year, a question from your auditor will inevitably pop up, “Have you tested your goodwill for impairment yet?” In 2015, that question might have sparked more grimace than in prior years; try DOUBLE the grimace.

A recently released survey of more than 8,500 publicly-traded companies in the U.S. found that total goodwill impairment increased from $26 billion in 2014 to $57 billion in 2015. Ironically, this occurred in a year characterized by exceptionally high merger and acquisition activity. The increased M&A activity last year seems to promise more write-offs in the future and even more reasons to be concerned about getting it right.

A colleague told me a story about fraud at a retail chain where she worked after college. The company was having a problem with cash theft in one particular store, so the district manager scheduled polygraph tests for the cashiers to find the culprit or culprits.

One of the benefits of working with a variety of clients is that the PMM team is able to observe excellence in governance first hand. Many of our clients are putting best practices to work in their organizations, and they have high expectations for the performance of their boards of directors and their audit committees. I’d like to share some of the traits I see as hallmarks of high-performing audit committees. You can use my observations to assess the performance of your own audit committee. After all, you might be one of the companies we think are the best.

With 2015 almost in the books, it’s time for most companies to focus on getting their Form 10-Ks issued and to begin planning for 2016.  To help prepare for both of those tasks, we need not look much further than the comments provided by Mary Jo White, SEC chairwoman, and others during the December AICPA Conference on Current SEC and PCAOB Developments.

If you commission regular audits of your company, you know the purpose of an effective audit is to deliver both an appropriate audit opinion and an opinion in which your shareholders and other stakeholders have confidence.  Many, if not most, accounting firms can provide that.  So what differentiates one audit firm from another, and how should you assess the quality of your audit? 

I’ve worked with a variety of companies – both public and private – during my career, and I have seen a variety of approaches to the role of audit committees. In the best cases, the audit committee works in collaboration with the internal audit group, the external auditor and management, and all of them share common goals.