Established one year ago, the Center for Audit Quality has become the official spokesperson and image booster for accounting firms. During its short life, the Washington, D.C.-based trade group has opined on regulatory proposals, conducted webcasts on issues facing the industry, and grabbed two spots on the Treasury Department’s Advisory Committee on the Auditing Profession.
To keep tabs on an industry that’s constantly adjusting to new rules amid constant scrutiny, Center officials have been traveling around the country collecting good and bad comments about public-company audits from corporations, investors, and others with vested interests in the audit industry. In the middle of those discussions sits Cynthia Fornelli, the Center’s executive director, who has become the spokeswoman for the 800 accounting firms that make up the CAQ’s members. Her mission: to foster confidence in the audit profession.
A former Bank of America executive and deputy director in the Securities and Exchange Commission’s investment management division, Fornelli recently discussed with CFO.com the CAQ’s plans for 2008. At the top of its agenda is a report with recommendations for improving the profession, which Fornelli expects will be completed sometime this year.
Why was the CAQ formed?
We help the public-company auditing profession by speaking with one voice to the issues that face public companies in our marketplace. Our key stakeholders are issuers, investors, regulators, and academics. We always make sure we have the perspectives of those key stakeholders top of mind.
“I think that everybody agrees that convergence to a single set of high quality standards is important and that the easiest way to do that would be the adoption of IFRS.”- Cynthia Fornelli, the Center for Audit Quality
What progress have you made in the past year?
We’re on our eighth city of 10 cities in our year-long … public dialogue tours, where we bring together our four key stakeholder groups to talk about how to modernize business and financial reporting. After we’ve gone through the 10 cities, we will issue our report summarizing what we’ve heard. [The report] will be vetted by those who have participated and include recommendations for change. Those recommendations could be for the profession to self-adopt, or recommendations for regulators and academics. Perhaps we’ll also have some recommendations to make to Congress. It depends on what we hear.
What are constituents saying? Have their comments surprised you?
For one, investors don’t necessarily want more information; they want more useful information. They’re looking for quality over quantity. The biggest surprise that has emerged for me is that they’re not necessarily looking for real-time information. Right now the financial information that investors get is all backward-looking, but they’re looking for some kind of a tool to see the trends that are emerging. Other things we’re seeing is that the financial information needs to serve a wide array of investors, and that investors would like technology to be harnessed in a way that they can slice and dice information on their own and further customize it.