February 21, 2014
Greg Giugliano, Firmwide Partner-In-Charge of Assurance Services, Featured in Long Island Business News Article, "Accountants Revolt Against Oversight Plan."
By Claude Solnik
A regulator's plan to require accounting firms to name the lead partners working on individual audits has sparked a firestorm of opposition.
The federal Public Company Accounting Oversight Board is proposing that accounting firms identify "lead engagement partners" in audits of public companies and indicate any portions of audits are farmed out to subcontractors.
While accounting firms routinely indicate that they collectively stand behind their audit opinions, they're not required to actually name names. The board's idea is to make accountants more accountable by revealing specifically who's in charge of each audit.
The board bills the proposal as a step toward transparency, but the idea has prompted widespread resistance from CPAs who sense imminent increases in litigation, liability and cost. The American Institute of Certified Public Accountants, the New York State Society of CPAs and many other accountant organizations are pushing back.
"Identifying the lead engagement partner ... places too much emphasis on one individual," said Gregory Giugliano, partner in charge of assurance services at international accounting firm Marcum LLP, which has offices in Melville.
"SEC counsel that I've spoken to indicated the liability would likely be personal to the individual partner," Giugliano said. "It's likely that there would be an increase in defense costs by necessitating the use of separate counsel."
Naming partners could also skew audit results, leading to "investment decisions that are based upon an incomplete set of facts," Giugliano said.