PBTK Comments on AICPA Proposal Regarding Auditor Independence

October 23, 2017 – Full-service accounting firm Piercy Bowler Taylor and Kern (PBTK) recently issued a response to the AICPA Professional Ethics Division’s Proposed Interpretation entitled “Long Association of Senior Personnel with an Attest Client,” dated July 14, 2017. The firm opposes the proposal and advocates for its total and permanent withdrawal.

PBTK highlights some of its reasons why this proposal is unnecessary and inappropriate, including the belief that it is not the mere duration of the association that potentially poses a familiarity or any other threat to independence; rather, it is the nature of the association and the CPA’s behavior. An appropriately maintained long association with a client can enhance the audit quality because it enables the auditor to gain a better understanding of the client’s business.

Small firms may have serious economic consequences if the proposal is approved. Local and regional firms do not have large advertising and promotion budgets, but rather rely on their individual personnel building relationships over time with members of the business community, many of whom become clients.

It appears likely that mandated auditor rotations will become an outgrowth of this proposal. Such rotations can substantially heighten the risk and frequency of audit failures due to lack of depth of knowledge in the early years following a partner or firm rotation. For more information, read the full comment letter online or contact the letter’s author, Howard Levy, CPA.

About Piercy Bowler Taylor & Kern

Piercy Bowler Taylor & Kern is a full-service accounting and business advisory firm that provides accounting and auditing, tax, consulting, valuation and litigation support services. Founded locally in 1990, the firm specializes in the casino gaming and leisure time industries, governmental and not-for-profit organizations, real estate development and construction industries and the legal and general business communities. Now with offices in Salt Lake City, Reno, and Las Vegas, Nevada, PBTK is one of the few independent accounting firms in its local markets to perform SEC audits. For more information on PBTK, visit pbtk.com or contact Shannon Hiller at shiller@pbtk.com or 702.384.1120.

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