MONTH-IN-BRIEF (Feb 2024)
SEC Chief Accountant Emphasizes Importance of Professional Skepticism and Audit Quality in Audit Oversight
By Thomas W. White, Retired Partner, WilmerHale
Securities and Exchange Commission (SEC) Chief Accountant Paul Munter recently provided a regulatory perspective on the importance of high-quality external audits of financial statements to investor protection. In a wide-ranging statement issued in February, entitled “An Investor Protection Call for a Commitment to Professional Skepticism and Audit Quality,” Munter addressed the roles of both the independent auditor and the audit committee. The statement does not break major new ground, but it does provide insight into the regulator’s views on audit quality and emphasizes investor protection as the paramount objective of the financial reporting oversight process.
Noting recent trends in audit deficiencies identified by Public Company Accounting Oversight Board inspections, Munter “remind[s] auditors that their fundamental responsibility to protect the investing public can be fulfilled only by commitment to high-quality audits.” This requires auditors “to exercise objective, impartial judgment and rigorous professional skepticism” in audits. Munter also stresses that “auditors should conduct engagements with a mindset that the investors, rather than management, are the audit client.”