By Tom Hanlon
“The pace and complexity of change in the auditing world have challenged both management and the profession,” John Oleniczak said. “The accounting profession has never been more relevant.”
Oleniczak, Midwest Region Assurance Managing Partner for PricewaterhouseCoopers LLP (PwC), addressed students at a recent Department of Accountancy Lyceum in the Business Instructional Facility. He discussed the extreme differences between a fully regulated environment compared to a non-regulated environment and how the auditor's role would look vastly different under each scenario.
“In the last hundred years,” he said, “the accounting profession has been somewhere in the middle, shifting one way or the other depending on the financial environment and government administration”. He discussed how Sarbanes Oxley emerged seismically, after accounting scandals such as Enron and WorldCom.
Keys to success
Amidst changes, though, Oleniczak noted that there is a constant: The need for new, young accountants with strong accounting and auditing skills. “Those are a given, and the minimum requirements,” he said. “You also need good businessperson skills, to be able to work well with a variety of constituents, and to be a strong and able communicator. And you need to be wiling to adapt to evolving goals and expectations.”
Another attribute that successful accountants possess, he said, is the ability to be professionally skeptical. “It’s tough, because we’re taught to be polite, to have good client relationships,” he remarked. “But we need to be professionally skeptical and assume what we’re given is wrong and we have to prove it right.”
If you have these attributes, he said, you have the keys to a successful accounting career.
Oleniczak also spoke of the current issues facing the Public Company Accounting Oversight Board (PCAOB), which oversees the auditors of US public companies. Two of those issues are mandatory audit firm rotations and disclosure of the auditor’s name in the audit report.
Critics of mandatory rotations say the benefits are negligible or questionable, while proponents say it enhances audit objectivity. One problem with rotations, Oleniczak said, is you “lose inherent audit knowledge as you switch companies.” It takes time to build relationships among key personnel involved in the audit process, and you have to start all over with new firms.
As for disclosure of the auditor’s name, Oleniczak noted that, “We support the idea of having our partners sign their names to audit reports, at least under some conditions.” He emphasized that there are potential advantages and disadvantages of publicizing a partner’s name. “It may enhance responsibility, but it may raise concerns about the partner’s liability and privacy,” he noted.
Other regulatory issues, he said, focused on the auditor’s reporting model and enhanced communications between the auditor and the audit committee.
“The questions about the auditor’s reporting model,” Oleniczak said, “are how much should the auditor report, and should the report include more information relevant to investors?” On the other hand, he noted, providing new information in audit reports could be expensive, so the regulators should consider the costs and benefits to investors.
“It is quite possible that something will be resolved regarding the auditor’s reporting model within the next 12 to 18 months,” but he cautioned, “It’s still a bit early to predict the nature of the ultimate changes.”
Regulatory intensity “higher than ever”
With all the focus on the changing regulatory environment, Oleniczak assessed that “The regulatory scrutiny is higher than ever. Since 2003, the profession has been regulated, but what it means to be regulated also has evolved, as our regulator has gained expertise and focus. During the past 24 months there has been increased pressure to raise audit quality; this has coincided with higher expectations on audit committees, financial executives, and internal audit departments.”
All of this regulation, he reminded students, is aimed at enhancing public trust, maintaining confidence in global capital markets, and driving consistency and transparency in financial statement disclosures. “Those are the primary objectives of a quality audit,” he said. “All other objectives you might have you can build around those three objectives.”
“Exciting time to be in the profession”
Of course, a primary objective of students is to be prepared to launch and build a career in the profession. Oleniczak counseled them to be ready to take on various roles and responsibilities in their careers – something he himself has experienced in his career with PwC. He started out auditing private companies, and he has served in a variety of roles for PwC, including as the firm’s US Geography Leader responsible for strategic planning and operational matters. He also was the firm’s leader for the Chicago LBO/private equity practice. Currently, he recommends actions on quality, market segmentation, and new client matters for PwC.
“We’re at an extremely exciting time to be in the profession,” Oleniczak said. “So many standards are still evolving, and you’re entering into the profession at a time when you can impact those standards. You’ll be getting in on the ground floor of a changing and dynamic environment in corporate governance and capital markets.”