AUDITING - US Chamber of Commerce

Auditing: A Profession at Risk(iii) Permit Parties to Agree to ADR andto Reasonable Limits on LitigationThere have been calls for the SECand banking regulators to limit theability of auditing firms and theirclients to agree to ADR and tolimitations on punitive damages,among other things, as part of theirengagement negotiations. This is anattempt to deprive private parties ofstandard tools that are used in otherindustries to manage litigation riskand is clearly misplaced regulatoryoverreach. More litigation risk won’tmake for better audits; it will simplymake for more defensive audits.(iv) Regulate Threats of IndictmentAgainst FirmsAn auditing firm lives or dies by itsreputation, and a criminal indictmentcan immediately destroy a reputation,without regard to ultimate criminalculpability. The inappropriateindictment of Andersen led directly tosevere job dislocations for 28,000 peoplein the United States — and many tensof thousands overseas. This was wrong,unfair, and bad for our economy.12If crimes are committed, enforcementauthorities should indict and prosecuteindividuals involved in those crimes.This would include managers withknowledge of the criminal activity orwith responsibility for the operations