Cahill Gordon Discusses Second Circuit Decision Lowering Bar for Materiality in Fraud Claims Against Auditors

By Joel Kurtzberg, John MacGregor, Jason Rozbruch and Jessica Urgo January 13, 2025 by renholding

On October 31, 2024, a Second Circuit panel amended its August 2023 decision in New England Carpenters Guaranteed Annuity & Pension Funds v. DeCarlo after granting a motion for rehearing1 and held that misstatements in an audit opinion may be

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SEC Chief Accountant on Fostering a Healthy “Tone at the Top” at Audit Firms

By Paul Munter May 16, 2024 by renholding

Audit firms are private businesses with the same legitimate interest in making a profit that all private businesses have.[1] But audit firms have also been entrusted to be essential gatekeepers in maintaining the integrity of our capital markets. The …

Do Investors Care Who Led the Audit?

By Daniel Aobdia, Vincent Castellani and Paul Richardson April 23, 2024 by renholding

Following a lengthy and contentious standard setting process, the Public Company Accounting Oversight Board (PCAOB), the U.S. regulator overseeing the auditors of publicly traded companies, implemented Rule 3211 in 2017. This rule requires audit firms to disclose the name of …

How Financial Statement Fraud Affects People’s Desire to Become Accountants

By Robert Carnes, Dane Christensen and Paul Madsen August 4, 2023 by renholding

Financial statement fraud has many negative effects, including a reduction in people’s willingness to participate in the stock market. It may also cast accountants in a negative light because they prepare and audit financial statements – sometimes even fraudulent ones. …

Wachtell Lipton Discusses PCAOB Proposal to Expand Auditors’ Oversight Role

By Steven A. Rosenblum, Trevor S. Norwitz, Wayne M. Carlin, Victor Goldfeld, Jenna E. Levine and Carmen X. W. Lu August 2, 2023 by renholding

The Public Company Accounting Oversight Board (PCAOB) has proposed changes to its auditing standards that would significantly expand auditors’ responsibilities and oversight of a company’s noncompliance with laws and regulations. If adopted as proposed, the rules would require auditors to …

Are We Seeing Double? Regulatory Overlap Between the SEC and the PCAOB

By Sarah J. Williams October 31, 2022 by renholding

The U.S. Securities and Exchange Commission (SEC) recently announced that it was initiating proceedings against a former audit partner at PricewaterhouseCoopers LLP for violating professional standards in reviewing the financial statements of Mattel, Inc. One might wonder why it is …

SEC Chief Accountant Discusses Auditors’ Responsibility for Fraud Detection

By Paul Munter October 13, 2022 by renholding

Fraud causes significant losses to investors each year.[1] Frauds that affect issuers and their investors may involve asset misappropriation, financial reporting misconduct, or, more generally, corruption. The Association of Certified Fraud Examiners (“ACFE”) estimates that organizations lose 5% …

SEC Accounting Chief Warns Chinese Companies About Risks of Changing Auditors

By Paul Munter September 8, 2022 by renholding

One of the recent central themes of the Office of the Chief Accountant[1] has been that high-quality audits are foundational to the trust that underlies capital markets.[2] High-quality audits protect investors, instill shareholder confidence in the quality of …

How Auditors Helped Spread Stock-Option Backdating

By Aharon Mohliver August 17, 2022 by renholding

Stock-option backdating, the practice of changing the reported date of a stock-option grant to an earlier date, proliferated in the 1990s and early 2000s, with nearly one-third of public corporations engaging in it, according to some estimates (Heron and Lie, …

Revisiting the Audit Expectations Gap

By Wendy Heltzer and Mary Mindak July 25, 2022 by renholding

As the regulation of public company audits evolves, questions persist over whether there is still a gap between the public and auditors over expectations for the responsibilities of auditors – what we call the expectations gap. In a recent study, …

Does Media Exposure Affect Financial Reporting Quality Through Auditors?

By Steven Cahan, Chen Chen and Rencheng Wang March 24, 2022 by renholding

The media play an important role in capital markets. Media coverage can attract the attention of investors and the public at large and affect the decisions of management. As such, the media can have a corporate governance role in disciplining …

How Much Do Various Advisers Affect the Success of M&A?

By Alexander Schmitz and Soenke Sievers August 5, 2021 by renholding

Companies that engage in M&A regularly employ a variety of financial, legal, and other advisers to enhance the chances of success for a deal. Though research has extensively examined the impact of financial advisers, and particularly investment bankers, on a …

The Role of the External Auditor in Managing Environmental, Social, and Governance Reputation Risk

By Tamara A. Lambert and Bright Asante-Appiah July 14, 2021 by renholding

Companies are under increasing pressure to manage their reputations on environmental, social, and governance (ESG) issues. Some companies have lost revenue, gone bankrupt, been boycotted by customers, or otherwise suffered a decline in value because of a negative reputation on …

How Managers’ Ability to Gather Information Can Affect the Value of Conservative Accounting

By Christian Laux and Volker Laux August 21, 2020 by renholding

Academics and practitioners, including lawyers, emphasize the importance of conservative accounting to lenders and corporate boards, allowing them to intervene and take corrective actions at an early stage. However, conservative accounting may also increase the risk of false alarms and …

SEC Commissioner Jackson Dissents from Proposed Amendments to Sarbanes-Oxley

By Robert J. Jackson, Jr. May 10, 2019 by renholding

Thank you, Mr. Chairman, and thank you to the Staff in the Division of Corporation Finance, including John Fieldsend, Elizabeth Murphy, Felicia Kung, Lindsay McCord, and Director Bill Hinman, for their work in developing today’s release. I also appreciate the

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Auditing Is Too Important to Be Left to the Auditors!

By John C. Coffee, Jr. January 28, 2019 by renholding

Clemenceau was right.[1] Reforming a profession cannot be left to the professionals. A cascade of auditing scandals — in the U.K., the U.S., Europe, and South Africa — has convinced many that reform is necessary. The political reaction has …

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Columbia Law School's Blog on Corporations and the Capital Markets

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