Is Ernst & Young audit quality panel just window dressing? – The Wall Street Journal

DUBLIN – The Big Four accounting firms are aware that they have an image problem. After a multi-year string of audit scandals and a series of announcements of plans for more scrutiny from regulators, the message seems to be sinking in. In a bid to be proactive about things, Ernst & Young has announced the creation of an "independent" audit quality panel made up of… people EY regularly does business with, including providing auditing services. Since one of the chief complaints that regulators have raised is that it's hard for audit firms – which rely on companies for their revenues – to take a hard line with their clients, it's not entirely clear how a panel of clients is going to crack the whip on audit standards. After all, unscrupulous managers and bonus-seeking executives have every incentive to keep audit quality poor, the better to hide their malfeasance. Add to that the fact that the panel will be selected and paid by EY and the whole "independence" claim looks a little dicey. The best one can say about it is that it probably won't hurt – any moves to improve the rigour and quality of auditing are welcome. But a substitute for improved regulation and genuine, external, independent oversight this ain't. – Felicity Duncan

Ernst & Young to Form Independent Panel to Help Improve Audits

By Michael Rapoport

Ernst & Young LLP is creating an independent panel to advise it on how to improve its audits, a nod toward outside oversight as audit quality at the Big Four accounting firms continues to be a major issue.

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