'02 Law Driving Costs of Auditing

by Luke Jones  on Monday, Sep. 19, 2011 12:00 am  

The difficulty doesn't fall entirely on the corporations, either. For a firm like PwC, Sarbanes-Oxley can cause confusion for partners, who are required to be in the same physical location as their client.

"That requires some planning for the firms because five years as a signing partner can go pretty quickly," said Martin Fiscus, managing partner for PwC in Springdale. "I have spent a good bit of my career in [Tulsa], moved to Austin, Texas, for five years, then went back to Oklahoma to pick up an engagement partner role with Chesapeake Energy, did my five years there. Then an opportunity presented itself, and I moved back to northwest Arkansas."

Managing where and when their partners go is a big part of the difficulty firms face, Fiscus said.

"It does create these issues around how you manage your firm, and how we make sure we manage that transition process."

PwC handles the multimillion-dollar auditing responsibilities for Windstream, Tyson Foods Inc. of Springdale and Dillard's Inc. of Little Rock.

 

Potential Problems

Fiscus mentioned another issue looming in the distance.

The Public Company Accounting Oversight Board, a non-profit corporation created by the Sarbanes-Oxley Act, has been tossing around the idea of making companies switch to an entirely new accounting firm every five years.

Some companies have had very long relationships with their accountants; Wal-Mart, for example has used Ernst & Young for more than 40 years. Switching after such a long time would present obvious problems.

"There's a lot of knowledge that gets accumulated through the audit process," Fiscus said. "It certainly is easier to transfer that knowledge in a partner rotation than it is when changing out an entire auditing team."

Fiscus estimated such a rule change would propel auditing costs into the stratosphere.

 

 

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