August 01, 2012
Edwin J. Kliegman, Founding Partner, Marcum LLP, Article "Bring Back Ethics" Featured in Accounting Today's Letters to the Editor
By Edwin J. Kliegman
The May 2012 edition of Accounting Today had several articles about auditor rotation. Dan Hood's editorial; Michael Cohn's cover article, "Hot topic, cool talk (mostly);" Bill Carlino's article, "The new breed of auditors;" and Miller & Bahnson's "Spirit of Accounting" all opined on the subject. I was awed by the fact that with all that space devoted to auditor rotation, there was not one word mentioned about ethics.
It is true that I have some old-fashioned ideas, and ethics is one of them, but it seems to me that the entire discussion of partner rotation hinges on ethics. If a partner practices ethically, it shouldn't matter how long they have serviced the client, or how familiar they have become with the principals and the operations of the firm being audited. If a partner practices ethically, there would be no question of their independence or conflict of interest. Dan Hood's quote is right on point: "Once upon a time, when asked who would guarantee the quality of audits, the accounting profession could reply, ‘Our conscience.’"