The federal regulator that polices accounting firms is proposing a major overhaul of how company audits are reported to the public, a move that could provide investors with deeper insight into the health of corporations, the New York Times DealBook blog reported yesterday. The Public Company Accounting Oversight Board wants accounting firms to include a potentially large amount of new information in the audit report that is attached to a company’s annual report. For instance, an auditor would have to explain where it found it difficult to form judgments about a company’s books. That difficulty might stem from the complexity of the company’s financial statements, or from a lack of evidence to support management’s estimates of an accounting item. The proposal is one of the most ambitious initiatives to come from the oversight board, which was set up 10 years ago after devastating accounting scandals at large companies revealed serious shortcomings at auditing firms.
