For the first time since launching as a blog in 2008 after its run without a
break from 2002 as “Balance Sheet” in
the business section of the International
Herald Tribune – “Re:Balance” is
going to be dark for several weeks. 

Intense and nearly
unbroken travel on three continents will impede staying current on all the
mischief within the capabilities of the inter-locking participants in the
structure by which assurance is provided on the financial statements of the
world’s large companies: issuers, the large accounting networks themselves, users
in the capital and investment markets, agencies of law enforcement and politicians
and regulators.

Developments in
this troubled world are likely to be consequential but cannot be predicted with
any level of confidence – so there will be catching up late in the spring.

Three items in the
last week head the list of topics to be monitored, however:

• The
  PCAOB announced consideration of a proposal for the reorganization of its
  auditing standards – something on absolutely nobody’s list of priorities — while the agency has failed to get
  off the snide on either auditor rotation or the content of the auditor’s report
  – reinforcing the unavoidable conclusion that this body has lapsed into terminal
  inconsequence. 

• The vote of the European Parliament’s Economic and Monetary Affairs
  Committee to scrap a proposed requirement for mandatory auditor rotation, in
  favor of a less binding “directive” on periodic re-tendering, has potential to
  inflict a dose of reason and reality on a topic long threatening to float away on clouds of fantasy. 

• And the
  news from the UK — that the move by Schroders to replace long-time
  auditor PwC with KPMG has foundered on the inability of the putative successor
  to satisfy the independence requirements — provides early validation that even
  aspirations limited to periodic re-tendering are subject to the realities of a
  market for audit services too constrained to function under legislated
  mandates.

All of these
challenges reinforce the over-arching need for fundamental re-engineering of
the reporting and audit functions in their entirety. But this process is
unlikely to advance in any significant way during my brief absence. 

Instead, there is
every reason to be confident that these problems will all be here and awaiting
attention when I return.

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