College of Business Communications Feature
  One of an occasional series of feature stories on the web


College home

Government Accountant Offers Audit Insight
from Regulatory Perspective

SEC seal and link to SEC home page.After completing a successful lyceum presentation, Donald Ryba shouted to the throngs of exiting students about the benefits of an internship with his 'company'-the federal government. "We'll show you things you won't see elsewhere."

Ryba illustrated his statement vividly in his February Accountancy Lyceum lecture when he gave students a regulatory perspective on public company audits-case by case. A senior staff accountant in the Division of Enforcement staff of the US Securities and Exchange Commission, Ryba talked about the shifting landscape of public company accounting due to Sarbanes-Oxley (SOX), described some themes and trends in the area of financial reporting, and cited certain criminal cases he was involved in and the enforcement climate of each case as well.

After Implementation

The implementation of SOX has re-configured the auditing terrain of public companies. Ryba described the pre-SOX era of the 80s and 90s as one in which public accounting firms focused less on audit services and more on services that were most financially lucrative. SOX has meant more regulation of public accounting and procedures; audit committees are now heavily involved in the audit process, and auditors must register with the PCAOB to do public company audits. "An audit really means an audit now," stated Ryba, and with that reality has come an increase in the necessity of his role.

The environment for public accounting has changed dramatically, but the nature of that change has yet to be determined. "I consider myself to be in a growth industry; if change is for the better I'll be out of a job." According to Ryba, 179 disclosure actions were filed in fiscal year 2004, a number more than double that of the previous year. In the business of fraud prevention, no element is exempt from the Commission. "We investigate all types of industries, all sizes of corporations, all areas of the US, and the world, and all sizes of audit firms. We run the gamut."

Ryba mentioned some themes and trends in financial reporting. One is the need for coordination of the criminal authorities involved in cases of financial fraud. Each successful case requires the smooth cooperation of attorneys, inspectors, FBI agents, and local police. Another important issue has been the effort to expedite investigations by using technology and increasing staff. Ryba also noted that auditor independence remains a critical element of sound financial reporting.

Facing the Music

He ended his talk with some accounts of the consequences public companies faced when going against his employer's regulations. The license of an unlucky California audit partner was revoled after failing to book an audit adjustment for sport apparel bastion North Face. A Colorado auditor was fined and barred from practive before the SEC after being convicted for destroying the financial work papers of Sports Haley, maker of headgear for bicycling.

A particularly memorable case for Ryba culminated in the actual arrest of a white-collar culprit. The senior staff accountant said the seizure reminded him of his days as a police officer. Ultimately, the goal of his present vocation does not strive far from that of his previous, blue-collared career. Now, though, the nature of the job is somewhat different. Ryba insists on working toward a transparent and fair market for all-from the CEO to the shareholder.

About the Speaker

Donald A. Ryba is a senior staff accountant in the Division of Enforcement staff of the US Securities and Exchange Commission in Chicago, Illinois, specializing in the area of financial fraud and financial statements and accounting analysis. Ryba had 16 years of public accounting experience as a manager engaged mainly in audits of public companies before his arrival at the Commission. A licensed Certified Public Accountant with a BA in business administration from Roosevelt University, Ryba is a member of both the American Institute of Certified Public Accountants and the Illinois CPA Society.

--Michael Romain
February 2005