Comment during initial PCAOB standards issuance.

1. CFO Blog - That Was Fast. Will It Work? - CFO.com Page 1 of 2
Video | Newsletters | Alerts | Member Center | Subscribe Now
Search go Login/Register
Magazines Europe Topics A-Z Blog Careers Webcasts White Papers Special Reports Conferences
CFO Blog: Commentary and Opinion
You are here: Home : CFO Blog : That Was Fast. Will It Work?
ACCOUNTING advertisement
MOST RECENT POSTS
That Was Fast. Will It Work? Car Wars
Posted by Tim Reason | CFO.com | US The Steve Taub Auto Bailout
May 16, 2005 4:22 PM ET Plan
As PCAOB Chairman William McDonough promised during Yikes!
the SEC's April 13 roundtable on 404, the PCAOB responded If Only All Loan Apps Were
swiftly to company complaints of auditor overkill on 404 This Easy
audits today with new guidance and a staff Q&A.
Lesson of the Crisis: Good
Economics and Bad Politics
The PCAOB's release today notes that the Q&A seeks "to Don't Mix
correct the misimpression that certain provisions of Auditing
Standard No. 2 need to be applied in a rigid manner that ABOUT THE CFO BLOG
discourages auditors from exercising the judgment FAQ
necessary to conduct an internal control audit in a manner
that is both effective and cost-efficient." ARCHIVES
« OCTOBER 2008 »
Whaddya say folks? Will this do the trick? Will audits be
Sun Mon Tue Wed Thu Fri Sat
more risk-based as a result? Cheaper? Did the PCAOB give
away the store, do too little, or get it just right? 1 2 3 4
Comments (4) 5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
Comments | Post a Comment 26 27 28 29 30 31
Critics (some of whom were cited in my recent article) who
View all October entries
felt 404 costs were high because companies had
underinvested in internal controls will likely see the following OPTIONS
part of the PCAOB's statement as a victory for the extensive
Email to a Colleague
corporate bellyaching that took place during the month of
March: "[A]lthough we have not performed Printer Friendly Version
a detailed analysis, it is sufficiently clear to us that the costs
to date associated with the implementation of Section 404 Get Blog Alerts
have been too high. For the Section 404 process to be
sustainable, these costs must be reduced in future years." RSS Feeds
WE DELIVER
The PCAOB, in fact, cites FEI's cost study shortly before Newsletters
making this statement. This Week in Finance
Today in Finance
Webcasts
But will this new statement reduce costs?
Notify me of future events
Posted by Tim Reason | May 16, 2005 03:26pm
Email Alerts
Accounting
Still reading through this and am surprised to find that Auditing
"according to a recent survey commissioned by the largest
U.S. accounting firms, auditors believe that the total costs of Enter your email address to begin
compliance with Section 404 will decline by 46 percent next receiving updates on these topics.
year."
Wow. Forty-six percent? I was reporting this stuff pretty
closely last month, but somehow I missed that one.
While we're on the subject, who exactly did they survey?
That sure wasn't the estimate I heard from the business
groups I spoke to.
Posted by Tim Reason | May 16, 2005 03:38pm
Reading through some more, I see the PCAOB has
addressed very specifically some of the major complaints
coming from corporations. Automated controls, for example,
do not need to be tested annually if there is no evidence of a
change. And the PCAOB, in question 53, states flat out that
documentation is not necessary for an auditor to conclude
that a control was effective?a huge source of complaints
from registrants.
Posted by Tim Reason | May 16, 2005 04:38pm
http://www3.cfo.com/blogs/index.cfm/detail/3981901?month=10&year=2008 12/13/2008

2. CFO Blog - That Was Fast. Will It Work? - CFO.com Page 2 of 2
I don't know if the blog will allow it, but my comment is
bascically my post to the SEC comment site, which, upon my
last checking, never actually made it to the site, even
though I got the "official" .pdf confirmation (the atachments
were posted, but not the actual comment):
Home | EDGAR Search Home | Latest Filings | Previous Page
Thank you for taking the time to comment on this release.
Your comments for file number 4-497 were received on
March 29,2005.
Please save this page for your records.
Comments received from:
Dwayne E Jorgensen, CIA, CFE
Global Practice Leader, Sarbanes-Oxley Services & IT
Governance, CTG
Duluth, Georgia
Email: dwayne.jorgensen@ctg.com
Comments:
Most organizations have tackled 302 compliance by
developing ad-hoc cascading certifications which require
several layers of management to sign off on the information
prior to the CEO and CFO. In addition, most companies have
attempted to satisfy by in many cases first-time
documentation of the processes which create their
financials, in order to satisfy 404 compliance criteria for their
external auditors. Finally, most of the efforts to-date has
been extremely labor-intensive, without establishing
systems designed to improve process efficiencies, nor retain
control
documentation in a reusable fashion, which will require
significant efforts to
replicate the control analysis on both a quarterly and annual
ongoing basis.
This is due in part to no clear front-runner in the
marketplace in the development of a continuous monitoring
solution. Now that the first year of 404 compliance has
occurred, most CFOs are realizing that a significant
amount of the efforts previously spent on the attainment of
their first 404 attestation will need to be spent again in 2005
on 302 and 404 efforts according to Gartner, 6 Billion will be
spent in 2005.
This realization has significant impact on the current trend
towards less is more coming from certain camps, especially
pertaining to small-to-mid-cap companies. What is truly
istressing are recent comments as quoted in CFO magazine
that the issue is embedded in COSO itself, versus current
efforts to satisfy Sarbanes-Oxley.
COSO, in its purest form, should be equally applicable
regardless of size of organization. The key, of course, is in
the application of the monitoring layer, using both
management and an independent third party, and the
frequency of the monitoring. The monitoring layer, along
with the timing and depth, is actually what the current furor
is about, not the other layers. Ironically, it was the abuse of
this layer in recent years that lead to the collapse of huge
companies, and the need for the Act in the first place.
The clear answer, for all size companies, is to increase the
frequency, ideally to the opitmal state of continuous
monitoring. The most logical, and cost-effective, way to
accomplish this is through automation, to the extent
possible, of the entire COSO model in the organization.
In my opinion, current efforts towards rethinking what has
already been done, redirected towards this optimal solution
of continuous monitoring,would have signficant benefit for
companies of all size, and therefore, their shareholders as
well.
Attachment 1: Dwayne Jorgensen short bio March 2005.doc
Attachment 2: Tip of the Compliance Iceberg.pdf
Attachment 3: SOX Automated Monitoring Position Paper-
DEJ.pdf
Posted by Dwayne Jorgensen | May 18, 2005 09:54am
previous post next post
About Us Advertise Contact Us Sitemap Privacy Subscribe RSS Feeds
© CFO Publishing Corporation 2008. All rights reserved.
http://www3.cfo.com/blogs/index.cfm/detail/3981901?month=10&year=2008 12/13/2008