"This agreement with China is an important step toward cross-border enforcement cooperation that is necessary to protect the interests of investors in U.S. capital markets,” said PCAOB Chairman James Doty.“We look forward to continued progress with our Chinese counterparts to reach an agreement on cross-border inspections of PCAOB-registered firms as well,” he said.

The PCAOB said the "MOU establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations in both countries’ respective jurisdictions and more specifically, it provides a mechanism for the parties to request and receive from each other assistance in obtaining documents and information in furtherance of their investigative duties."

What all of that means is the agreement creates a framework for cooperation on enforcement. It doesn't guarantee it.

The Chinese regulators reserve the right to reject requests if complying would violate Chinese law among other things. That is a really big exception.

The agreement also doen't solve or resolve the on-again, off-again battle between the SEC and Deloitte Touche Tohmatsu CPA, also referenced as D&T Shanghai in court documents, that has been roiling since 2011.

Ditto for the December 2012 action filed by the SEC charging five Chinese member firms (BDO China Dahua Co., Deloitte Touche Tohmatsu CPA, Ernst & Young Hua Ming, KPMG Huazhen, and PricewaterhouseCoopers Zhong Tian) with violating the Sarbanes-Oxley Act for a willful refusal, in response to SEC requests, to provide audit work papers and other materials prepared in connection with audit work or interim reviews. (See ANR 49, Vol. II, Dec. 7, 2012.)

On its face the agreement isn't much to get excited about. Literally it gives the Chinese regulators the right to cooperate with the PCAOB uness the Chinese regualtors don't want to help and then they can refuse. The main benefit appears to be thta it is a step toward an inspection agreement.

The PCAOB said in addition to developing an enforcement MOU, the PCAOB has been engaged in continuing discussions with the CSRC and MOF to permit joint inspections in China of audit firms that are registered with the PCAOB and audit Chinese companies that trade on U.S. exchanges.

Approximately 47 audit firms in China are registered with the PCAOB, according to the PCAOB.

The PCAOB reproposed for public comment an auditing standard, Related Parties, and related amendments to other standards to address areas that have been contributing factors in a number of financial reporting frauds.

Board said if the reproposed standard were adopted it would increase the auditor's focus on the evaluation of a company's identification of, accounting for, and disclosure of its relationships and transactions with related parties. If the reproposed amendments were to be adopted they would enhance the auditor's identification and evaluation of a company's significant unusual transactions, according to the PCAOB.  Additionally, they also would require that the auditor perform procedures, as part of the process to assess the risk of material misstatement in the financial statements, to obtain an understanding of a company's financial relationships and transactions with executive officers. These procedures would not require the auditor to make any determination regarding the reasonableness of, or any recommendations regarding, compensation arrangements.

"The Board is proposing new and revised standards in areas that have been a continued focus in cases of financial reporting fraud," said PCAOB Chairman James Doty. "The number and magnitude of these cases demonstrate that heightened auditor scrutiny is warranted, and the reproposed standard and amendments will focus auditors on providing a more consistent examination of these areas."

The reproposed standard and amendments include revisions to respond to public comments on the Board's initial proposal issued on Feb. 28, 2012. Those revisions include clarifying the relationship of the reproposed standard with the Board's risk assessment standards. Additional revisions would require the auditor to evaluate whether the company has properly identified its related parties and relationships and transactions with related parties.

"The Board's goal with the initial proposal and this reproposal has been to develop an approach that promotes audit quality and investor protection, while at the same time taking into account economic considerations, including avoiding unnecessary costs and implementation issues," said PCAOB's Chief Auditor and Director of Professional Standards Martin Baumann.

KPMG

“Aerospace and defense companies are challenged to meet the pressures of decreasing government defense budgets, increased globalization and competition, and a highly complex regulatory environment,” Gates said. “We at KPMG look forward to offering insights and services that assist A&D executives in growing and optimizing their businesses, managing risk and helping them to address these significant challenges.”

In his new role, Gates will be responsible for setting the strategic priorities and growth agenda for KPMG’s Global and U.S. Aerospace & Defense practice. He will drive strategy and client services and broaden KPMG relationships with senior aerospace and defense executives, and will act as the lead engagement partner on several large client engagements. He will also help drive the creation of market-recognized thought leadership and industry knowledge for the aerospace and defense sector.

Gates is an eight-year veteran of the firm based out of Atlanta.

He succeeds Marty Phillips.

Phillips has been appointed as the firm’s Global and U.S. Head of Management Consulting for Diversified Industrials.

McGladrey

In his new role, Tiefenthaler will lead McGladrey's Bay Area team, which provides assurance, tax and business consulting services to clients in the area, with San Francisco and San Jose locations. The firm said the pair of offices cover the North and East Bay, San Francisco, San Jose and Silicon Valley.

"Our growing team is intensely focused on providing Bay Area clients with innovative solutions and the best possible service to help them succeed. This past year, we tripled our partner count in the area, and we have an aggressive plan in place to add additional partners and professionals in the near term and over the next three years. We look forward to continuing our growth and sharing our team's expertise with middle market businesses in the Bay Area," said McGladrey Regional MP Don Natenstedt,

The firm said Tiefenthaler has more than 24 years of public accounting experience. He functions as partner, concurring partner or SEC partner for many of the firm's largest bank clients and has extensive experience with complex audit and accounting matters; acquisition accounting, FDIC-facilitated transactions; purchase/acquisition due diligence; stock-based and incentive compensation matters; , initial public offerings; other SEC filings and private capital offering. He is a member of McGladrey's National Financial Institutions Steering Committee, and he recently completed a four-year term as a member of the firm's Board of Directors.

The PCAOB has scheduled an open meeting for 9:30 a.m. on Tuesday, May 7, to consider reproposing for public comment an auditing standard, Related Parties.

The Board also will consider related amendments, including those regarding significant unusual transactions.

The reproposed standard and amendments would revise auditor performance requirements in areas that could pose significant risks of material misstatement in company financial statements.

The PCAOB initially issued a proposed standard and amendments on Feb. 28, 2012. Related information is available on the PCAOB website.

The meeting is open to the public and will take place in the Board's meeting room at 1666 K St. NW, Washington, DC. A webcast via a link on the PCAOB website will be made available the day of the meeting. The meeting also will be available via podcast later in the day.

The meeting agenda includes a discussion of recent PCAOB developments and the Board's current standard-setting activities. Additionally, the SAG will discuss:

• The Board's Future General Reports: How the PCAOB may improve the usefulness of its publicly issued general reports related to inspection findings, such as summary reports on the inspections of small and large firms, and topical reports, such as fraud and internal control.

• Audit Quality Indicators: Consideration of audit quality indicators that might be most helpful to audit committees and investors when evaluating audit services at the engagement team or firm level.

• Outreach with Audit Committees about PCAOB Activities: Potential enhancements to the PCAOB's outreach to and interaction with members of audit committees.

• Related Parties: The Board announced today that on May 7 it will consider reproposing for public comment an auditing standard, Related Parties, as well as amendments to certain PCAOB auditing standards regarding significant unusual transactions and other amendments. Pending approval from the Board to issue the reproposal, the SAG will discuss the Board's reproposed standard.

The meeting will be held at The Westin Washington, DC City Center Hotel, 1400 M Street NW, Washington, DC, and will be open to the public on May 15 and May 16 from 8:30 a.m. to 12 p.m. each day. The meeting also will be available via webcast on the PCAOB website.

Mahoney Sabol & Co./Glastonbury, Conn. expanded its Public Sector Practice with the addition of Robert Howard, Jr. and five staff members specializing in municipal, quasi-governmental and not-for-profit specialty practice area.

“We are very excited to welcome Rob and his team on board and look forward to expanding this robust part of our practice,” said Mahoney Sabol MP James Mahoney. “Mahoney Sabol now becomes the premier firm for not-for-profit entities and governmental organizations looking for high level assurance and consulting services and expertise within a regional firm fee structure.”

Howard, who joins the firm as a Partner  is directing its Public Sector Practice.

The firm said he specializes in providing audit and consulting services to non-profit and governmental organizations, including Federal Single Audits under OMB Circular A-133 and state single audits under the State Single Audit Act.

Prior to joining Mahoney Sabol & Co., Howard served as  Grant Thornton's New England Government Practice Leader and spent nearly 20 years at CCR (acquired by GT in 2011 See ANR 36 Vol. I, Dec. 5, 2011). At CCR he served as a partner and the Director of Governmental Services.

The shareholders of Elliott Davis/Greenville, S.C. and Lunsford & Strickland have voted to combine their firms effective July 1, 2013.

The combination gives Elliott Davis a Raleigh office.

“We have served Triangle-based clients for years; therefore, Raleigh is a strategic opportunity and prime location for us,” said Elliott Davis Managing Shareholder Rick Davis. “By joining forces with Lunsford & Strickland, Elliott Davis will add top caliber talent who will help us seed and grow an even more significant local presence in the near term.”

Lunsford & Strickland, founded in 1989, provides assurance, tax, business valuation and litigation support services.  The firm has clients in biotech, life sciences, software, healthcare, not-for-profits, closely-held businesses, real estate as well as retail and hospitality.

The combined firm of 450-people will have offices in Raleigh and Charlotte, N.C.; Columbia, Charleston, Greenville, and Greenwood, S.C.; Augusta, G.A.; and Richmond, V.A.

The PCAOB published a formal statement concerning the benefits that may be available to registered public accounting firms and individuals who provide extraordinary cooperation in PCAOB investigations.

The release describes what the PCAOB may consider to be extraordinary cooperation and how credit might be reflected for such cooperation. The policy is generally consistent with the Board's existing practices.

According to the policy statement, extraordinary cooperation is voluntary and timely action beyond compliance with legal or regulatory obligations. Cooperation that could result in credit includes self-reporting violations before the conduct comes to the attention of the Board or another regulator. Self-reporting is more valuable the earlier it is provided.

The other types of extraordinary cooperation that could result in credit are taking remedial or corrective action to reduce the risk of similar violations recurring, and providing substantial assistance in the PCAOB's investigative processes.

Credit for cooperation may result in reduced charges or sanctions in a disciplinary proceeding. In some cases, extraordinary cooperation may lead to language in settlement documents noting the cooperation and its effect. In exceptional cases, extraordinary cooperation could lead to no disciplinary action at all.