Audit the Auditors

by Gary Snyder

In Silence: The Impending Threat to the Charitable Sector, we strongly suggest that all charities should ‘audit the auditors.” We believe that nonprofit auditors are a weak link in the watchdog process. We have further evidence that is the case. The Public Company Accounting Oversight Board, the watchdog for U.S. accounting firms, has taken issue with audits performed by two of the "Big Four" auditors. In reports posted on the PCAOB website, PwC was found to have shortcomings at 28 of 76 audits inspected by the PCAOB. That's up from nine in the prior inspection. Problems were found at 12 of 54 KPMG audits reviewed, up from eight. While the review was a look at for-profit companies, there is no reason to believe that such problems could not occur with charity audits.

PwC chairman and head partner Robert Moritz noted the rise and said the firm was "working to strengthen and sharpen the firm's audit quality…” A spokesman for KPMG, said the PCAOB's inspection process "has played an important role in improving audit quality, and their insights have measurably helped KPMG as we work to continuously improve our audit performance and strengthen our system of audit quality control."

Nonprofit Imperative gathers its information principally from public documents...some of which are directly quoted. Virtually all cited are in some phase of criminal proceedings; some have not been charged, however. Cites in various media: Featured in print, broadcast, and online media outlets, including: Vermont Public Radio, Miami Herald, National Public Radio, Huffington Post, The Sun News, Atlanta Journal Constitution, Wall Street Journal (Profile, News and Photos), FOX2, ABC Spotlight on the News, WWJ Radio, Ethics World, Aspen Philanthropy Newsletter, Harvard Business Review, Current Affairs, The Chronicle of Philanthropy, St. Petersburg Times, B, USA Today Topics, , Newsweek.com, Responsive Philanthropy Magazine, New York Times...and many more • Nonprofits: On the Brink (iUniverse, 2006)