Peeling away financial reporting issues one layer at a time

More on the CAQ Survey

I thought I had beaten flat the CAQ’s survey of audit committee members in my last post.  Lo and behold, here is one more nasty tidbit brought to my attention that merits sunlight.

Among the organizations that with whom CAQ partnered for the recruitment of survey takers was the National Association of Corporate Directors (NACD).  NACD must know who among its members are on audit committees; nevertheless, it blithely sent CAQ’s survey out as a mass mailing to all of its 17,500 members.  As you may well have anticipated, there were no controls to ensure that the survey would be responded to by audit committee members only.

OK, so maybe not all respondents were actually members of audit committees — big deal. But, what if respondents weren’t even members of a corporate board?  According to the NACD website:

"NACD accepts both individual and full board membership. Associate membership is available to professional services organizations — such as legal practices, audit firms and compensation consultants — who provide essential board guidance and advisory services." [italics supplied]

Recalling that CAQ based their statistics on the responses of only 253 volunteers, how many of these volunteers weren’t even board members?   What if 50 of the respondents were actually audit partners?  My point is that they survey methodology was so loosey-goosey, we have no way of knowing. 

Gatekeepers Hoodwinking Gatekeepers

As Bejamin Disraeli said, "There are three kinds of lies: lies, damned lies, and statistics."  Perhaps statistics is the most insidious of the trio because they can be the most beguiling.  The CAQ sits at the same point on the Disraeli scale as any other lobbying organizations who conciously produce data that they intend to be mistaken for information.  But, there should be an important difference: the CAQ is controlled by audit firms who, according to the "P" in "CPA", purport to be ethically bound to protect the public interest.  When journalists are hoodwinked by CAQ into reporting on mere data as if it were information, then CPAs have failed to live up to the ethical standards of those who fund it.

Journalists also function in a large sense as gatekeepers for misleading information.  How ironic is it that CAQ, an organization funded and controlled by audit firms, was so facile in its manipulation of other gatekeepers?

1 Comment

  1. Reply Francine McKenna April 11, 2008

    I think you can imagine my feelings about the CAQ. Don’t trust them as far as you can throw them with anything other than PR for the audit firms.

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