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June 07, 2011


Elliot Kamlet

Interesting article today in the CFO Journal of the Wall Street Journal. It seems that Apple lets out its audit for re-bidding every 5 years and switches auditors.
Why are fees high enough that a competitor with the same cost structure can come in for less? The only logical answers I can think of is that the current auditor simply raises fees all the time even above the required level. Also, the new auditor is hoping to grab some other business for itself. But how does the new auditor learn the ins and outs of the business so quickly that it can afford to underbid the established auditor?
Sarbanes Oxley might be the answer. Since an auditor may no longer perform advising work for an audit client, most multi-national companies employ 2-3 of the Big 4 in different capacities. They all must learn the ins and outs of the company. When they begin an audit, they already have a great deal of knowledge about the company.

Robert F. Kelley

"Mandatory rotation of auditors" along with "independence" lie together in the murky pool of contemplation {def. the action of looking at something for a long time} never to be revived. Absolute salvation for auditing will be real-time auditing with access by lenders and investors.

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