Lynn Turner Testifies Before Congress on Role of External Auditors and Others in Financial Crisis

Lynn Turner is highly respected for his prior positions, including as Chief Accountant at the SEC. His testimony makes very interesting reading. For example:

  • He points out that few (23% per the PCAOB) investors seem to be finding much value in the audit report.
  • He believes the audit firms failed to warn of off-balance sheet and other risks and uncertainties.
  • In his opinion, the process for developing accounting standards is flawed and slow.

I continue to believe that the root of the "problem" — in terms of whether the external auditors failed or not — is that these days US auditors only really provide an opinion on compliance with US GAAP. They are not required to assess whether the financial statements provide a true and fair view of the financial condition and results of operations.

While the role of the external auditor is under review, I don't have a lof of confidence that the root cause is understood and will be solved.

I welcome your opinions.

Posted on Apr 8, 2011 by Norman Marks

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