Consulting: a Key Element of Quality
In today’s world of rapidly changing and expanding professional standards, government regulations and oversight, the typical practitioner, often bombarded with ever more creative financial instruments and business transactions, feeling like he or she is on a hamster wheel, navigating through a complex maze, dodging bullets or chasing a runaway train in this fast-moving professional environment.
While striving to provide top quality professional services to clients that, in some segments, may be facing persistent economic stress, many practitioners face new issues and challenges in their practices almost daily such as they have never faced before.
While striving to provide top quality professional services to clients that, in some segments, may be facing persistent economic stress, many practitioners face new issues and challenges in their practices almost daily such as they have never faced before.
It’s almost impossible to keep up with it all.
Whether you are a financial executive or an independent auditor, it is in times like these when one most needs a voice of experience that is readily available so you don't spin your wheels trying to navigate the growing maze of unfamiliar regulatory and professional literature while you struggle to meet your ever more complex needs or those of your clients.
According to a 2019 survey of 306 accounting and finance professionals reported in Accounting Today, corporate controllers and financial officers are enduring more and more stress due to pressures from management to increase the speed of reporting, the volume of work and increasing compliance demands not to mention "pressure to overlook or misreport negative realities."
This is why, whether you are an auditor or a preparer of financial statements, from time to time, you may need ready access to highly experienced outside consultants, sometimes with hard-to-find, specialized skills, who devote substantial time and energy to keeping current with the latest developments so they can help you resolve problems quickly and reduce your risk of error, thus providing you with peace of mind at reasonable cost. Yes, especially in these times, consultation is a critical feature of a reporting entity's internal control or an audit firm’s system of quality control; it helps promote and assure quality, reliable reporting and auditing and improves one's ability to exercise sound professional judgment with confidence.
It was reported in October 2018 in an article in CPA Practice Advisor that 39% of CFOs reported that they were likely to to hire outside finance and accounting consultants in the next 12 months, according to a survey conducted that year by Robert Half Management Resources.
The big audit firms maintain substantial national office technical "think tanks" staffed with talented people who have access to extensive research materials and who devote all of their time and energy to activities such as analyzing new standards and rules, providing practice guidance and consulting with engagement professionals on critical client issues. Large public companies have much of the same. However, smaller audit firms and reporting entities typically don't have such resources readily available in-house and, because they don't know where to turn, often fail to seek outside help thereby putting their financial reporting or audit quality at risk unnecessarily.
But that is what Howard does for the smaller audit firms and reporting entities. He has access to more than one comprehensive technical reference service that is always up-to-date and that can be obtained only by subscription at an annual cost of several thousands of dollars — and the experience and judgment to use them effectively and efficiently. Howard can be your national office "think tank."
Whether you are a financial executive or an independent auditor, it is in times like these when one most needs a voice of experience that is readily available so you don't spin your wheels trying to navigate the growing maze of unfamiliar regulatory and professional literature while you struggle to meet your ever more complex needs or those of your clients.
According to a 2019 survey of 306 accounting and finance professionals reported in Accounting Today, corporate controllers and financial officers are enduring more and more stress due to pressures from management to increase the speed of reporting, the volume of work and increasing compliance demands not to mention "pressure to overlook or misreport negative realities."
This is why, whether you are an auditor or a preparer of financial statements, from time to time, you may need ready access to highly experienced outside consultants, sometimes with hard-to-find, specialized skills, who devote substantial time and energy to keeping current with the latest developments so they can help you resolve problems quickly and reduce your risk of error, thus providing you with peace of mind at reasonable cost. Yes, especially in these times, consultation is a critical feature of a reporting entity's internal control or an audit firm’s system of quality control; it helps promote and assure quality, reliable reporting and auditing and improves one's ability to exercise sound professional judgment with confidence.
It was reported in October 2018 in an article in CPA Practice Advisor that 39% of CFOs reported that they were likely to to hire outside finance and accounting consultants in the next 12 months, according to a survey conducted that year by Robert Half Management Resources.
The big audit firms maintain substantial national office technical "think tanks" staffed with talented people who have access to extensive research materials and who devote all of their time and energy to activities such as analyzing new standards and rules, providing practice guidance and consulting with engagement professionals on critical client issues. Large public companies have much of the same. However, smaller audit firms and reporting entities typically don't have such resources readily available in-house and, because they don't know where to turn, often fail to seek outside help thereby putting their financial reporting or audit quality at risk unnecessarily.
But that is what Howard does for the smaller audit firms and reporting entities. He has access to more than one comprehensive technical reference service that is always up-to-date and that can be obtained only by subscription at an annual cost of several thousands of dollars — and the experience and judgment to use them effectively and efficiently. Howard can be your national office "think tank."
The Compelling Case for Consulting
A public company is required by law to maintain adequate internal control over financial reporting, and private companies should do so as well. An audit firm's system of quality control is intended to provide the firm with reasonable assurance that its personnel comply with applicable professional standards and the firm's standards of quality.
Encouraging professionals to consult whenever difficult or contentious issues arise is a strength within a company's internal or an audit firm's quality control system, helps promote a culture that values quality work and builds professional pride. Maintaining a robust consultation process enhances the quality of financial reporting or auditing. In fact, for auditors, consulting is required by both the auditing and quality control standards when sound professional judgment suggests that the circumstances warrant it.
The ever evolving standards of the AICPA (and similarly, those of the PCAOB), require audit firms to establish and maintain quality control policies and procedures that afford reasonable assurance that consultations with qualified individuals occur when necessary. These standards clearly and specifically state that auditors have a responsibility to bring to the attention of appropriate personnel matters that, in their professional judgment, are difficult or contentious and, therefore. may require consultation. They require engagement partners to take responsibility to be assured that appropriate consultations have been undertaken when needed. And they encourage firms to make sufficient resources available to enable them to take advantage of advisory consulting services offered by other firms, professional and regulatory bodies or other qualified organizations whenever the firm lacks appropriate internal resources. In fact, with increasing frequency, regulators such as the PCAOB and the SEC have been requesting audit firms judged to have exhibited performance quality deficiencies to engage outside consultants as part of their remediation plans.
The auditing standards also require that the nature, scope and resultant conclusions of consultations be appropriately documented. They tell us that complete, detailed documentation of consultations contributes to an understanding of the subject matter and conclusion, including the decisions made and their underlying rationale or basis. Besides pointing you in the right direction and helping you determine the correct answers to your questions quickly, whenever requested to do so, I can provide assurance that the documentary support created for the matter meets the requirements of the applicable standards and will likely withstand scrutiny from regulators and other adversaries.
But before engaging a professional consultant to provide advisory services, reporting entities and audit firms must assume responsibility and take appropriate action to assess carefully the competence and capabilities of those who would deliver consulting services and determine whether they are suitably qualified to do so.
Encouraging professionals to consult whenever difficult or contentious issues arise is a strength within a company's internal or an audit firm's quality control system, helps promote a culture that values quality work and builds professional pride. Maintaining a robust consultation process enhances the quality of financial reporting or auditing. In fact, for auditors, consulting is required by both the auditing and quality control standards when sound professional judgment suggests that the circumstances warrant it.
The ever evolving standards of the AICPA (and similarly, those of the PCAOB), require audit firms to establish and maintain quality control policies and procedures that afford reasonable assurance that consultations with qualified individuals occur when necessary. These standards clearly and specifically state that auditors have a responsibility to bring to the attention of appropriate personnel matters that, in their professional judgment, are difficult or contentious and, therefore. may require consultation. They require engagement partners to take responsibility to be assured that appropriate consultations have been undertaken when needed. And they encourage firms to make sufficient resources available to enable them to take advantage of advisory consulting services offered by other firms, professional and regulatory bodies or other qualified organizations whenever the firm lacks appropriate internal resources. In fact, with increasing frequency, regulators such as the PCAOB and the SEC have been requesting audit firms judged to have exhibited performance quality deficiencies to engage outside consultants as part of their remediation plans.
The auditing standards also require that the nature, scope and resultant conclusions of consultations be appropriately documented. They tell us that complete, detailed documentation of consultations contributes to an understanding of the subject matter and conclusion, including the decisions made and their underlying rationale or basis. Besides pointing you in the right direction and helping you determine the correct answers to your questions quickly, whenever requested to do so, I can provide assurance that the documentary support created for the matter meets the requirements of the applicable standards and will likely withstand scrutiny from regulators and other adversaries.
But before engaging a professional consultant to provide advisory services, reporting entities and audit firms must assume responsibility and take appropriate action to assess carefully the competence and capabilities of those who would deliver consulting services and determine whether they are suitably qualified to do so.
So when assessing the competence and capabilities of a prospective consultant to maximize the quality of your professional services or financial reporting, consider this:
Experience matters!
Experience matters!
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