More often than not, our core audit engagement teams are assisted
by valuation specialists, actuaries, financial derivative resources or
share-based payment specialists. These professionals, most of whom are
specially-trained audit partners and senior managers, principally assist
the auditors in assessing the qualifications of third-party specialists
engaged by a client to calculate fair value measurements and disclosures
and determining the reasonableness of the assumptions and methodologies
used in such measurements. Of course, where valuations and estimates are
used to determine fair values, there are numerous other audit procedures
that are employed. These include documentation and testing of
management's process over calculating fair value measures,
including assumption development, as well as testing completeness,
accuracy, and relevancy of the underlying data used in the valuations
and other calculations.
Q. How could accounting programs appropriately prepare students for
the fair value accounting measurements they will inevitably deal with
when they enter the business world?
A. There is no doubt that the movement toward the increased use of
fair value accounting and estimation methods requires additional skill
sets in accountants, auditors, analysts and financial reporting
specialists, than were previously required. I would argue that the
enhanced fair value requirements may significantly increase the
workloads of these individuals, given the complexity and the need for
more continuous updating of fair values estimates than before.
Unfortunately, this comes at a time of already stretched resources of
both corporate accounting and financial reporting staffs and external
auditors.
Accounting programs are going to have to ensure that there is a
focus on teaching the next generation of CPAs valuation techniques and
in-depth financial statement analysis tools. Additionally, higher
education institutions may need to consider providing more opportunities
for students to specialize in areas of economics, finance, and
statistics [in addition to accounting degrees], to ensure that
today's students are adequately prepared to tackle tomorrow's
challenges.
Interviewed by Patrick A. Casabona, The Peter J. Tobin College of
Business, St. John's University (This interview took place on
January 29, 2007.)
COPYRIGHT 2007 St. John's University, College
of Business Administration Reproduced with permission of the copyright holder. Further reproduction or distribution is prohibited without permission.
Copyright 2007, Gale Group. All rights
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