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Praise for column on auditing.

Editor's note: This letter was sent to FEI President and CEO Colleen Sayther and is being used with the writer's permission.

Thank you for your reasoned and articulate memo published in the President's Page in the July/August issue of Financial Executive ("Shifting Sands: The Changing Relationship Between Financial Executives and Auditors.").

Having "cut my teeth" as a consultant with one of the then "Big Eight" accounting firms in the mid-1960s, I can attest to the beginnings of the lack of independence of the audit function with respect to clients.

The driving force at that time was a significant need by clients to become modern with what computer technology had to offer. There was a critical lack of talent available to help them with this task. Therefore, clients were prepared to pay large fees for this service, based upon a perceived value proposition slanted toward and favoring computer technology.

While I performed early audits of information functions of clients for the audit staff, I was favorably rewarded for the extensive checklists of potential future system project opportunities by the audit managers and partners. No, there was not independence in my judgment, even at that time. Large consulting fees and plain greed became the driving force.

If capitalism and free markets are to survive and prevail, the auditor's first obligation must be to the attestation function and not to clients' needs for financial and tax engineering or systems engineering. Auditors cannot participate in the process of counseling clients who are (maybe even legitimately) attempting to manage either earnings or the balance sheet for the company's more than often short-term objectives.

I suggest that this fundamental goal of the attestation function can only be achieved through the watchful eye of an independent auditor motivated to do things right--and not motivated by a client that is attempting to manipulate outcomes, legitimately or not, for some financial gain.

Steven A. Windell

Washington State Chapter

Seattle, Wash.
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Title Annotation:Letters to the Editor
Author:Windell, Steven A.
Publication:Financial Executive
Article Type:Letter to the Editor
Date:Sep 1, 2004
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