Underlying the specific accusations of bad bookkeeping and flawed auditing is the broader issue of auditor independence.
The issue of auditor independence was largely driven by reports that partners in PricewaterhouseCoopers owned stock in clients of the firm's audit services.
The issue of auditor independence has grown thornier in recent years as accounting firms have remade themselves into full-service operations, in which auditing takes a back seat to more profitable consulting services.
The issue of auditor independence grew more difficult toward the end of the 20th century, especially as auditing firms began offering nonattestation functions (such as consulting services) to new and existing clients particularly in the areas of taxation, information systems, and management.
The issue of auditor type and its association with disclosures is uncertain in literature.
Jack Ciesielski, editor of the Analysts Accounting Observer, says the issue of auditors' responsibility came up at a recent corporate governance conference sponsored by Stanford Law School and attended by SEC Chairman Christopher Cox and SEC Enforcement Director Linda Chatman Thomsen.
On the key issue of bolstering auditors' independence, a weak reform bill passed in April by the House of Representatives is the legislative equivalent of prescribing an aspirin for a brain tumor.
For example, brokerage firms can vote their clients' shares on important issues like election of auditors and directors and proposals to increase the number of shares authorized for issuance, and even on matters concerning compensation that are not related to stock options.
"The ICT supporting the agency's management of bovine TB went live three months late in October 2011, and the agency immediately faced some issues," the auditor said.
The report, issued by the European Court of Auditors, comes as E.U. governments have put in place unprecedented austerity measures at home, and have sought to prevent a proposed increase of about 6 percent in the bloc's spending next year.
