To the Editor:
As the executive director of the Connecticut Society of Certified Public Accountants for almost 15 years, I am a regular reader of the Hartford Business Journal. With this as my frame of reference, I am compelled to respond to the article, “Absurdity of audits raises value question” by Michael Smith in the June 27 issue. Smith’s obvious disdain for the public accounting profession leads him to make a number of points that merit clarification or refutation.
Smith questions whether CPAs make good candidates for chief financial officers. While he asks this question, he does not mention that a significant number of CFOs are, in fact, CPAs who have moved into positions of corporate leadership.
Smith clearly suggests that the audit process should have alerted us all about the financial crisis that was on the horizon in 2007. This is an extreme and unique position for anyone to take, especially for a CPA who knows what an audit is and what it isn’t.
In the wake of the Great Recession, Congress passed sweeping new financial legislation, the Dodd-Frank Act that addresses virtually every aspect of the financial catastrophe we experienced. Given the scope and depth of the Dodd-Frank Act, it’s hard to conclude that financial statement audits were at fault, when the auditing process was not a subject of Dodd-Frank.
Smith also goes back in history to include mentioning several notorious situations of senior management collusion to mislead both auditors and the public. He does not mention that there are approximately 15,000 audits of publicly held companies in this country each year. These audits help our capital markets maintain their leadership position in the world.
Finally, in order to make his point, Smith includes a reference to Bernard Madoff’s audited financial statements as being used to mislead investors, etc. This is blatantly unfair: Madoff’s auditor admitted to issuing an audit report without performing any of the audit work.
In my opinion, the author of “Absurdity of audits raises value question” unfairly disparages the audit process.
Arthur J. Renner, CPA
Executive Director
Connecticut Society of CPAs
