Accounting firms, public companies, and audit committees routinely retain Murphy & McGonigle to represent them and their professional, executives, and members in enforcement and criminal investigations and actions, regulatory inquiries, and litigation in state and federal courts throughout the United States. We are conversant with how accounting professionals apply accounting principles and standards and, as former SEC enforcement lawyers and federal prosecutors, we know how regulators interpret them. We leverage that experience and knowledge to represent clients before the SEC and other regulatory bodies, and to defend clients in private securities fraud and professional services liability actions. We understand the unique relationship between independent auditors and their attest clients, and the audit committee's critical role in corporate stewardship. That understanding informs our counsel in matters ranging from auditor independence and audit quality to internal investigations and corporate disclosures.
The pace of new SEC enforcement actions in the audit, accounting, and financial reporting space did not ease in 2017 as it did in other areas (see table on page 8). We anticipate the SEC, not to mention the PCAOB and the plaintiffs’ bar, will scrutinize how corporations and accounting firms adapt to the new revenue recognition and lease standards, as well as to the newly enacted standard for the auditor’s report (AS 3101). Among other conditions, AS 3101 requires auditors to communicate in their audit committee reports any “Critical Audit Matters” arising from the audit. How that requirement might impact the auditor-client relationship – and whether it gives rise to unintended or creative liability – remains to be seen.