Cangemi Tells Treasury: Preparers Want “Good Quality Audits, Properly Scoped, at Reasonable Cost”
Dec. 3, 2007
FEI Summary

On Dec. 3, 2007, FEI President and CEO Michael P. Cangemi testified before the U.S. Treasury Department's Advisory Committee on the Auditing Profession (ACAP). He appeared on one of four panels testifying on issues relating to the sustainability of the audit profession, including human capital, concentration and competition among the firms, liability issues and general sustainability issues. Others appearing on Cangemi’s panel were James Turley, CEO of Ernst and Young; Ashpinwall (“Tony”) Sondhi, an analyst, professor, and member of AcSEC and the EITF; and James D. Cox, a law professor at Duke Law School.

Representing preparers, with broad-based experience as an audit firm partner, corporate CFO and CEO, Cangemi’s central theme was that preparers want “good quality audits, properly scoped, at reasonable cost.”

Cangemi suggested various areas for ACAP's consideration, including expanding audit firm choice, and expanding the types of work that can be done at various ends of the spectrum, from para-professionals to specialists, to lower audit costs and reduce turnover at firms.

Asked by Lynn Turner -- an ACAP member, former SEC Chief Accountant and Public Company Accounting Oversight Board (PCAOB) Standards Advisory Group (SAG) member and FEI member -- whether FEI still supported the view expressed a few years ago that there should be more transparency by audit firms, Cangemi responded, “Yes, under principles of good governance, more transparency from the firms would lead to better overall governance.”

Turner also asked Cangemi’s panel if they thought expanded disclosure of ranges of estimates would be useful.

Analyst, professor and consultant Tony Sondhi responded that information would be useful.

Cangemi questioned if only the most sophisticated users would benefit from that kind of disclosure. Additionally, such disclosures could raise issues of providing competitive information and could drive increased cost.

A total of 19 panelists representing the legal profession, accounting profession, regulators and others testified at the day-long hearing. Additional highlights from the meeting can be found in FEI’s financial reporting blog.

Prepared by: Edith Orenstein, Director, Technical Policy Analysis, Financial Executives International. This summary does not represent FEI opinion unless specifically stated above.