James R. Doty, a leading authority on accounting regulation, discusses audits and audting regulation.

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Authority on accounting regulation discusses past, future of auditing

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3:46 p.m., Oct. 23, 2014--James R. Doty, chairman of the Public Company Accounting Oversight Board (PCAOB), met with University of Delaware students this month and also presented a lecture on issues in auditing and audit regulation. 

Doty’s address, which focused on audits and audit regulation, was presented by the John L. Weinberg Center for Corporate Governance and the Accounting and MIS department at the Alfred Lerner College of Business and Economics

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UD Provost Domenico Grasso introduced Doty, calling him “one of the leading and most influential thought leaders in the regulatory arena.”

“We’re helping drive conversations and debates on issues that ultimately will affect all of our lives and perhaps the world,” Grasso said. “Because the state of Delaware is so linked to corporate governance and regulatory infrastructure, our campus community has been visited by a number of important global business leaders over the years.”

During his address, Doty discussed the ways in which auditing can be used as more than a compliance function and regulatory obligation. Utilizing the audit as a strategic resource to make smart investment decisions, he said, could yield positive results and help businesses to build much-needed long-term capital.

“The audit is critical to establishing the investor trust necessary to expand capital formation for long-term initiatives,” Doty said. “I see it as fundamental to investor confidence and the reliability of financial information.”

Doty also considered the history of the audit, stretching back to 13th century England, and its role in corporate governance. He examined the ways in which auditing has developed and changed and will continue to evolve in the future.

“A more reliable, relevant audit function could indeed contribute to expansion of capital formation for long-term business investment by increasing confidence,” he said. “We are pursuing at the PCAOB several long-term initiatives to use the power of transparency and market forces to enhance the reliability of the audit and, at the same time, reorient it toward the needs of investors.”

Speaking further about his work at the PCAOB, Doty mentioned the board’s new Center for Economic Analysis, which analyzes many aspects of auditing. These include role of the audit in financial markets, the structure of the auditing profession and the effectiveness of audits in facilitating capital formation and protecting investors.

In the future, Doty said, it will benefit companies and shareholders alike to “make the audit more relevant to the needs of long-term investors and re-establish the audit as an investment in shareholder confidence and in better decision-making by the issuer’s management, as opposed to a compliance cost of doing business.”

“I believe the national interest in long-term capital investment must be supported and fostered by a vigorous auditing foundation,” Doty continued. This is due in part to “the potential of the audit for influencing better decisions by management and better corporate conduct.” 

Charles Elson, the Edgar S. Woolard Jr, Chair in Corporate Governance, professor of finance, and director of the Weinberg Center, said, “We were delighted to have someone of Chairman Doty’s reputation, intellect and influence visit the University — it fits perfectly into the Weinberg Center’s mission and objective. We were pleased that the Department of Accounting and MIS, chaired by Scott Jones, co-sponsored this event with the center.”

Breakfast with accounting students

Doty spent the morning before his address having breakfast with UD accounting students David Sang, Jim Celia, Jon Schwinn, Brandon Beller, Christian Tasker, Sophia Resutek, Jamie Charest, Ksenia Ioffe, Lauren Hines and Al Redrup. 

Doty said it was “exciting” to communicate with so many young people and students in the audience.

“You will be the future leaders of what should be one of the most exciting times in history,” Doty said to these students. “The issues we’ll talk about today are going to be yours to shape and influence.”

The group of students said that Doty offered valuable guidance about the accounting profession during breakfast.

“He truly cared about giving us great advice and answering our questions,” said Hines. “We were really thankful that he took the time out to come speak to us.”

"He was very welcoming and offered good advice that was relevant to being a student,” agreed Charest. She said that Doty reminded students of the importance of “continually learning, always educating yourself.”

Hines also said Doty reminded students to remain open to many options for their future careers.

“During this time, we probably think we want to go to a big auditing firm,” said Hines.  “But we shouldn’t feel that any decision we make is our final decision that will set our path in stone. We should be open to other opportunities like working in government or for smaller accounting firms. We shouldn’t be afraid if we don’t know exactly what we want to do.”

“The biggest thing I took away from it was that your career doesn’t stop just because you take a certain opportunity,” added Ioffe. “He talked about how your career continues growing, and that’s something that I think is really important for us in college because we’re scared to take that first step. He stressed that we’ll have other opportunities and other ways to grow beyond your profession. Just do what you’re passionate about, not what you think will make you money.”

Celia agreed that Doty reminded him about the importance of being passionate about your work. 

“The auditing function is extremely important within capital markets,” said Celia. “We provide a great service. You should always be appreciative of the fact that the work you do means something.”

Article by Sunny Rosen

Photos by Kathy F. Atkinson

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