{"version":"1.0","provider_name":"Faces Online","provider_url":"https:\/\/faces-online.nl\/en\/","author_name":"Asset Financials","author_url":"https:\/\/faces-online.nl\/en\/author\/elleke-bender\/","title":"The Accounting Profession on a Journey - Faces Online","type":"rich","width":600,"height":338,"html":"<blockquote class=\"wp-embedded-content\" data-secret=\"B3wsrWfxXA\"><a href=\"https:\/\/faces-online.nl\/en\/accounting-profession-journey\/\">The Accounting Profession on a Journey<\/a><\/blockquote><iframe sandbox=\"allow-scripts\" security=\"restricted\" src=\"https:\/\/faces-online.nl\/en\/accounting-profession-journey\/embed\/#?secret=B3wsrWfxXA\" width=\"600\" height=\"338\" title=\"&#8220;The Accounting Profession on a Journey&#8221; &#8212; Faces Online\" data-secret=\"B3wsrWfxXA\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\" class=\"wp-embedded-content\"><\/iframe><script type=\"text\/javascript\">\n\/* <![CDATA[ *\/\n\/*! This file is auto-generated *\/\n!function(d,l){\"use strict\";l.querySelector&&d.addEventListener&&\"undefined\"!=typeof URL&&(d.wp=d.wp||{},d.wp.receiveEmbedMessage||(d.wp.receiveEmbedMessage=function(e){var t=e.data;if((t||t.secret||t.message||t.value)&&!\/[^a-zA-Z0-9]\/.test(t.secret)){for(var s,r,n,a=l.querySelectorAll('iframe[data-secret=\"'+t.secret+'\"]'),o=l.querySelectorAll('blockquote[data-secret=\"'+t.secret+'\"]'),c=new RegExp(\"^https?:$\",\"i\"),i=0;i<o.length;i++)o[i].style.display=\"none\";for(i=0;i<a.length;i++)s=a[i],e.source===s.contentWindow&&(s.removeAttribute(\"style\"),\"height\"===t.message?(1e3<(r=parseInt(t.value,10))?r=1e3:~~r<200&&(r=200),s.height=r):\"link\"===t.message&&(r=new URL(s.getAttribute(\"src\")),n=new URL(t.value),c.test(n.protocol))&&n.host===r.host&&l.activeElement===s&&(d.top.location.href=t.value))}},d.addEventListener(\"message\",d.wp.receiveEmbedMessage,!1),l.addEventListener(\"DOMContentLoaded\",function(){for(var e,t,s=l.querySelectorAll(\"iframe.wp-embedded-content\"),r=0;r<s.length;r++)(t=(e=s[r]).getAttribute(\"data-secret\"))||(t=Math.random().toString(36).substring(2,12),e.src+=\"#?secret=\"+t,e.setAttribute(\"data-secret\",t)),e.contentWindow.postMessage({message:\"ready\",secret:t},\"*\")},!1)))}(window,document);\n\/\/# sourceURL=https:\/\/faces-online.nl\/wp-includes\/js\/wp-embed.min.js\n\/* ]]> *\/\n<\/script>\n","thumbnail_url":"https:\/\/faces-online.nl\/wp-content\/uploads\/2014\/07\/Faces-banner-ter-vervanging.jpg","thumbnail_width":1200,"thumbnail_height":628,"description":"Over the past decade the accounting profession has attracted widespread attention more than ever before. If it is not because of accounting scandals and the financial crisis, then it is because of reports from the AFM concerning the poor quality of financial audit by accounting firms, the involvement of accountants in corruption (such as Ballast Nedam) or changing regulations for auditors. The question that presents itself is whether these developments are understandable and whether the new regulations will ultimately lead to a better functioning accounting profession and thus to a restored confidence in the audit and the financial markets. For this reflection, I will first briefly discuss the explanation for the existence of the accounting profession to subsequently give an indication of its history with emphasis on the latest developments. Finally, I will provide you with my comments on the most recent developments, policies and regulations relating to the accounting profession, for which I want to emphasize that it is my personal opinion. Auditing Theory For explaining the existence of the accounting profession, there are several theories available. The most common of these is the information theory, where the existence of the audit profession is explained by the reduction of the information risk as a result of the work of the auditor. The reasoning followed is that by counting the reduced information risk of for example, the financial statements, as evidenced by the attached audit report, investors and financers make calculation with a lower risk premium in the desired return on the presumed reliability of information provided. Confidence that investors and financiers in the auditor&#8217;s report of the auditor, is thus crucial. If the perceived information security is not provided by the auditor, it may ultimately harm the existing basis of the accounting profession. Brief Historical Overview The emergence of the accounting profession in the Netherlands is situated at the end of the 19th century, when the fraud of Pincoffs at the African Trading Association is discovered. Pincoffs draws false balance sheets and a large number of private investors are at the receiving end. Until then Pincoffs had a high reputation in the Rotterdam community and possessed all investor&#8217;s trust. After\u00a0 Pincoffs&#8217; fraud scandal, a way has been made for the appointment of a controller of the books, made by the supervisors. The profession is evolving and gradually, large accounting firms are being formed\u00a0 through partnerships. The 80s and 90s can be characterized as a further commercialization of the audit market, where the individual practitioner is subordinate to the commoditisation of accounting firms, which are becoming more and more international operating and centrally controlled. During this period we also see that the advisory departments of accounting firms experience tremendous growth. The audit shall be subordinate to the advisory\u00a0 function. Typical is the practice of &#8216;lowballing&#8217; where accounting firms are buying from a client through an incredibly low budget control to offset sizeable consulting with that same client. This way heavy pressure is put on the independence of the auditor, one of the pillars for the accounting profession. The settlement follows the beginning of the 21st century. Immediately after entering a new century, there is a large number of apearances of several accounting scandals. Enron, Worldcom, Parmalat and Ahold are just a few examples of fraudulent financial reporting that form a plague to financial markets. Accountants have failed to detect or signal these frauds. Recent Developments The accounting profession has yet tried to change its course, through self-regulation, but for that, the trust of the financial markets was put to the test too much and the profession was too derailed. All over the world, supervision in the accounting profession was strengthened or introduced. In the United States, the PCAOB (Public Company Accounting Oversight Board) is formed and in the Netherlands the WTA (Wet Toezicht Accountantsorganisaties) is introduced, in which supervision is entrusted to the AFM. Also typical is the Sarbanes Oxley legislation in the United States in which listed companies are held accountable through an Internal Control Statement on ensuring reliable financial reporting for which the auditor must provide assurance. Also the independence rules are tightened worldwide, listed companies are at the forefront and in particular the combination of audit and advisory is increasingly questioned. In fact, the introduction of the WTA in the Netherlands, is a logical development. Up to that point there was in fact just mention of laws and regulations that primarily focused on the individual professional, while as outlined above, within the accounting firms, the individual professional increasingly came under pressure and in fact performed mainly centrally formulated polices of the firm. Due to the introduction of the WTA, regulations came into balance with the way in which the profession was practiced, which made it possible they could be maintained at the level of the audit firms. The initiatives at European level are more of a recent date. Commissioner Barnier has made \u200b\u200bsuggestions in his green paper on the reform of the accounting profession. Most eye-catching were his proposals for the rotation of audit firms and the execution of so-called joint audits. The rotation of individual auditors in audit firms had previously been controlled by the introduction of the WTA. Barnier now wanted to take the next step by also requiring that at least public interest entities (PIEs called) should change their accounting office periodically. He linked this to a proposal to not entrust auditing to one accounting firm, but to provide two audit firms who will perform the audit of the financial statements jointly, and will collectively make an assessment, as is now usual in France. There is a lot of lobbying by accounting firms against Barnier&#8217;s proposals and ultimately in European context, not much is left of his proposals in the draft guidelines that are now circulating. That is unfortunate, because in principle, Brnier&#8217;s proposals do point in the right direction. Rotation of audit firms and joint audits reinforce the independence of auditors and hence the objectivity in their judgment. At leasy byy rotation"}