Financial Reporting and the Role of Independent Auditors

Testimony was given concerning the necessity to improve audit quality and to reduce the number of alleged audit failures. GAO believes that the accounting profession should be: (1) providing better disclosure and early warnings regarding companies that are in precarious situations; (2) improving its efforts in determining whether companies are complying with laws and regulations; (3) ensuring that internal controls and accounting systems are in place to prevent fraud and mismanagement in the companies being audited; and (4) reducing the secrecy that surrounds the peer review process, and making the process mandatory for all public accounting firms that audit public corporations and government entities.