（2006）Guarding the auditing guards.pdfVIP

ANNUAL CONFERENCE Opinion T O P I C New technology and a total quality approach can reengineer the PCAOB inspection function. GUARDING THE AUDITING Investors rely on independent auditors to provide GUARDS assurance that the financial statements of corpora- tions are reasonably accurate. For the most part, B Y M I C H A E L A L L E S , their reliance has been based on the notion that A L E X A N D E R K O G A N , M I K L O S V A S A R H E L Y I , A N D auditors are independent of management and, J . D O N A L D W A R R E N , J R . therefore, represent the stakeholders in public companies. But the accounting and reporting fail- ures in past decades and the more recent account- ing scandals involving Enron, WorldCom, and others have brought the credibility and ethical behavior of independent auditors to the forefront. The public, investors, and the U.S. Congress ask, “Where were the auditors when these transactions were occurring?” Fe b r u a r y 2006 I STRATEGIC FINANCE 31 Never have the accounting and auditing While the PCAOB has