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by joeag
5175 days ago
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The link does in fact mention auditing but you have to go to the "Jobs Act Alert" linked on that page. I wanted to cite to the "Jobs Act Alert" link, but it's a PDF, so I thought it was easier to cite to html page containing the link. Your citation to the NY Times only governs "a company's internal financial controls" - not it's financials or independent accounting requirements (which is essentially audited financials). My original criticism of the Rolling Stone assertion as reproduced by quote in the 37Signals blog post was and is that companies are exempt from independent accounting requirements. That's supported in the information I cited. |
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What the magazine was referring to is that auditors would no longer have to attest to a company's financial controls for financial reporting (mentioned in the Orrick PDF you intended to link http://www.orrick.com/fileupload/4619.pdf).
This means, for example, they would not bother to make sure revenue is being booked correctly, as explained here http://online.wsj.com/article/SB1000142405270230407200457732...
When Groupon recently had to restate (and slash) previously-reported revenue, this was due to weak internal controls, the same sorts of controls the JOBS act would exempt from being audited. http://online.wsj.com/article/SB1000142405270230402350457731...
So you really need an independent audit not just of the numbers but of the controls behind the numbers if your goal is to make sure investors get accurate financial information about a company.
Thus audits of financial controls are a key part of independent accounting.
The only change I'd make to Rolling Stone's original piece would be to revise to "exempt them from CERTAIN KEY independent accounting requirements for up to five years." But that's for clarity, not technical accuracy.
Taibbi is communicating an accurate idea - the JOBS act seriously weakens independent oversight of accounting for affected companies.