In a speech given by Jeanette Franzel – a board member of the Public Company Accounting Oversight Board (PCAOB) – to the University of Tennessee, she outlined two important items facing the Board. The first is their investigation of 19 accounting firms for deficiencies in their audits of public companies. Unable to divulge specifics, Franzel does outline that professional skepticism, tone at the top, and supervision were the most common findings for these 19 firms. The second important item in consideration at the PCAOB is the termination the registration of 870 firms. These 870 firms do not engage in the audits of public companies or broker-dealers, so their registration is serving no purpose, Franzel explained.
For accounting firms, the auditing of public companies represents the highest risk activity a firm can engage in. The frequency and severity of a public audit claim is considerably higher than any other type of claim. Calculated Risk Advisors explains that this is taken into account by the underwriters and is reflected in the premium an account pays for their accounting firm professional liability insurance. It is important to proactively state the firm’s expertise and risk control practices to underwriters in order to obtain the most favorable pricing. Contact a licensed broker today to discuss how to best position your firm for a favorable renewal.