Question 1: The New York Stock Exchange requires all companies traded on it to utilize internal auditors. Commonly, companies do not directly hire their own internal auditors. Rather, internal auditors often are employed by an outside CPA firm, and client companies outsource their needs for internal auditors from these outside CPA firms.
a.Why don’t companies hire their own internal auditors?
b.Although companies outsource their internal auditors from CPA firms, they never outsource them from their own external auditor. Why not?
Question 2: After a food inspector examines a restaurant’s food safety practices, the food inspector gives the restaurant a letter grade that, by law in my state, must be posted in the front window of the restaurant. Auditors, though, do not have to post their PCAOB inspection reports on their websites. I suggest that the PCAOB should issue auditors ratings that they have to display on the home page of their websites. If restaurant food is deficient, I will never go back there again. But how am I, a simple investor, supposed to know if an auditor’s work is deficient?
a.Should the PCAOB give auditors numerical scores or letter grades, so the investing public can better assess audit quality?
b.How often are auditors inspected?