The Hindu Business Line : Pulling the trigger to infuse reporting habit in accountants

Vice grip seems to be tightening around the accountants, in the US. Top news on www.pcaobus.org, the site of the Public Company Accounting Oversight Board (PCAOB) speaks of `Proposes Rules for Periodic Reporting by Registered Accounting Firms'.

In a May 23-dated press release the Board refers to Section 102(d) of the Sarbanes-Oxley Act of 2002, according to which each registered public accounting firm shall have to submit an annual report to PCAOB, and may also be required to report more frequently, to provide information specified by the Board or the Securities and Exchange Commission. Now come the rules in draft form, to operationalise the reporting requirement.

`The period of thy tyranny approacheth,' accountants may fret, borrowing a line from King Henry VI. The Board's response may well be, `May be it is the period of your duty,' inspired by Mark Antony's words in Antony and Cleopatra. Be that as it may, it is useful to know more about the proposal, because Indian CAs too may have a similar requirement cropping up in not too distant a future.

`The reporting framework' being proposed addresses two types of obligations. One, `basic information once a year about the firm and the firm's issuer-related practice over the most recent 12-month period'; and two, report within 14 days if specified events occurred.

Practice-related info that has to be reported includes "the number of firm personnel who exercised authority to sign the firm's name to an audit report, and a breakdown showing the percentage of the firm's total billings that was attributable to each of the following categories of services provided to issuer audit clients, viz. audit services, other accounting services, tax services, and non-audit service." Also to be reported are `certain potentially significant new relationships,' as for example, new employees or partners.

`Special Reporting' that has to be done within 14 days is about non-routine events. The Board specifies many `reporting triggers' including withdrawal of audit report, bankruptcy proceedings and change of firm name.

Among the other triggers, these two should be of interest: "The firm, or a partner, shareholder, principal, owner, member, or manager of the firm, has become a defendant in certain types of criminal proceedings"; and "the firm has taken on, or entered into an arrangement to receive consulting or other professional services from, individuals or entities meeting certain criteria regarding disciplinary history."

The 68-page PCAOB document, tucked in the site's `dockets' section, promises that the annual and special reports would be made public on the Board's site `promptly upon being filed by the firm.'

A footnote mentions that users of the site will be able to go to a page for a particular firm and find there a chronological list of all filings by the firm, with each item on the list linking to a complete copy of the filed form. So, we'd have a way to know more about Indian firms that are registered with the Board.

Don't look for similar data here, because the Institute of Chartered Accountants of India may not have critical data about the accounting firms that it professes to regulate.

Data such as, what company audits are performed by each accounting firm, what proportion of income is from tax practice, and so forth. Or, do we need a different regulator for the purpose?

http://AccountSpeak.blogspot.com

D. Murali

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