Latest news with #PublicCompanyAccountingOversightBoard
The Hill
2 days ago
- Business
- The Hill
US markets need accountability — it would be a mistake to dismantle Sarbanes-Oxley
Recently, the House Financial Services Committee approved a proposal to dissolve the Public Company Accounting Oversight Board, which supervises audits of publicly listed companies, and transfer its responsibilities to the Securities and Exchange Commission. In times of economic uncertainty, the strength and integrity of our financial systems become even more crucial. Regardless of the outcome with the board, it would be a mistake to eliminate the broader Sarbanes-Oxley framework that has served as a foundation for market integrity since 2002. Dismantling these guardrails would increase the risk of financial reporting fraud that could trigger a crisis of confidence among investors and increased market volatility, putting trillions of dollars in market value and retirement savings at risk. The bipartisan Sarbanes-Oxley Act was enacted in 2002 in the wake of a number of accounting scandals, most prominently Enron and WorldCom, which wiped out billions in market value and retirement savings. It passed with overwhelming support in both houses, reflecting the urgency lawmakers felt to address the crisis threatening our capital markets. At its core, Sarbanes-Oxley established crucial guardrails. Section 404 requires companies to maintain robust internal controls over financial reporting, while Section 302 mandates that CEOs and CFOs personally certify the accuracy of financial statements. These provisions ensure that those who lead corporations are accountable for the integrity of their financial disclosures. Sarbanes-Oxley also established independent oversight of auditors responsible for verifying financial statements. This provided essential third-party assurance that investors could trust what companies report — a crucial element in rebuilding market confidence. Critics of Sarbanes-Oxley complain that compliance costs are a burden on businesses. While initial implementation was indeed expensive, companies have since learned to leverage technology and risk-based approaches to streamline the process. Research from firms like Protiviti and AuditBoard consistently shows that these costs have decreased over time as processes have become more efficient. More importantly, we must weigh these costs against the benefits. The data is compelling: financial restatements, which initially surged after Sarbanes-Oxley implementation as companies 'cleaned up' their books, have shown a sustained downward trend. According to the Center for Audit Quality, restatements rose sharply right after the law was enacted, to nearly 1,800 in 2006, but have generally trended downward overall since — with a substantial decline of 60 percent between 2006 and 2009. Restatements dropped 50 percent, from 858 restatements in 2013 to just 402 in 2022, XBRL reported. America's capital markets remain the envy of the world precisely because investors trust them. Foreign companies willingly subject themselves to our rigorous standards because the resulting investor confidence translates into better valuations and capital access. This trust premium has contributed to trillions in market value growth over the past two decades. As this regulatory reorganization is considered, we should ensure that any structural changes don't inadvertently weaken the broader framework of Sarbanes-Oxley that delivers accountability, transparency and investor protection. Instead, continued refinement of implementation and embracing technological innovations can make compliance more efficient without sacrificing effectiveness. The goal is evolution, not revolution. Twenty-three years after its passage, Sarbanes-Oxley has become an integral part of America's financial architecture, contributing to a period of remarkable growth and stability in our capital markets. The political right and left came together to enact this landmark legislation because they recognized a fundamental truth: without trustworthy financial reporting, markets cannot function effectively. Today, that core principle remains unchanged. While organizational structures may evolve, preserving the integrity of Sarbanes-Oxley's core principles isn't just good for investors — it's essential for America's continued economic leadership. Richard Chambers worked in auditing in the U.S. Government Accountability Office. He is currently CEO of Richard F. Chambers and Associates and senior adviser at AuditBoard.
Yahoo
23-05-2025
- Business
- Yahoo
PCAOB issues guidance on accounting estimates
The Public Company Accounting Oversight Board (PCAOB) has released a new resource publication titled 'Audit Focus: Auditing Accounting Estimates,' to assist smaller audit firms in tackling accounting estimates. The guidance is designed to provide auditors, particularly those working with smaller public companies, with essential reminders and practices for handling accounting estimates, a challenging component of financial statements. Accounting estimates, which include impairments of long-lived assets and allowances for credit losses, are prevalent in financial statements and can significantly impact a company's financial position and operational results. These estimates often involve subjective assumptions and measurement uncertainty, making them prone to management bias and complex processes, thus posing significant audit risks. The PCAOB's inspection staff has identified ongoing deficiencies in auditors' testing of accounting estimates. These include failures to identify significant assumptions used by companies in determining accounting estimates. The "Audit Focus" edition offers key reminders from PCAOB standards, insights into common deficiencies, and good practices from audit firms handling smaller companies. Previous "Audit Focus" editions have addressed topics such as journal entries, audit committee communications, and critical audit matters. Earlier in May 2025, the PCAOB released new staff presentation videos to assist firms in implementing four key areas of their quality control (QC) system under QC 1000, A Firm's System of Quality Control. These presentations are part of the PCAOB's ongoing efforts to support firms in complying with board standards. Led by the PCAOB's office of the chief auditor, the videos cover roles and responsibilities, ethics and independence, people resources, and technological and intellectual resources, addressing specific requirements for designing, implementing, and operating QC systems. Recently, the PCAOB established a formal protocol agreement with the Slovak Republic's Auditing Oversight Authority. The agreement seeks to strengthen collaboration in overseeing auditors and public accounting firms across both regions. "PCAOB issues guidance on accounting estimates " was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
12-05-2025
- Business
- Yahoo
PCAOB releases content to aid firms implement QC 1000 standards
USA's Public Company Accounting Oversight Board (PCAOB) has released a new series of staff presentation videos to assist firms in implementing four key areas of their quality control (QC) system under QC 1000, A Firm's System of Quality Control. These presentations are part of ongoing efforts to support firms in adhering to the board's standards. Led by the PCAOB's office of the chief auditor, the videos focus on roles and responsibilities, ethics and independence, people resources, and technological and intellectual resources. Each topic addresses specific requirements and responsibilities for firms in designing, implementing, and operating their QC systems. In its statement, PCAOB said firms can access additional implementation-related videos, resources, and tools on the Implementation Resources for PCAOB Standards and Rules page. In a separate development, PCAOB formalised a statement of protocol with the Auditing Oversight Authority of the Slovak Republic (UDVA) on 5 May 2025. The agreement aims to enhance cooperation in supervising auditors and public accounting firms within both jurisdictions. The PCAOB, established by Congress, oversees audits of public companies to protect investors and ensure the preparation of informative, accurate, and independent audit reports. It also supervises audits of brokers and dealers, including compliance reports under federal securities laws. These initiatives come amid a proposal by Republican legislators to reportedly dissolve the PCAOB. The proposal is part of a larger federal budget bill that also seeks to reduce funding for the Consumer Financial Protection Bureau. Recent changes in White House leadership have influenced PCAOB's management, reflecting ongoing political dynamics. Critics argue that the PCAOB imposes unnecessary costs and duplicates the functions of the Securities and Exchange Commission. "PCAOB releases content to aid firms implement QC 1000 standards " was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Times
05-05-2025
- Business
- Business Times
The pitfalls of overhasty business deregulation
JOHN F Kennedy was fond of the expression 'don't ever take a fence down until you know the reason why it was put up'. First laid out by English writer GK Chesterton, it is a reminder not to rush reforms through without considering the consequences. There are few better examples of how Donald Trump and his supporters are ignoring this principle than Republicans' plan to scrap the US audit regulator, the Public Company Accounting Oversight Board (PCAOB). Under the proposal, included as part of the vast tax and spending bill before Congress, the PCAOB's responsibilities, which include ensuring and policing audit quality, would be folded into the Securities and Exchange Commission (SEC). The plan may yet fall foul of procedural hurdles. But it is of a piece with other chainsaw-first reforms set in motion since Trump's return, powered by a belief that all deregulation must be good for business. They include Trump's pausing of enforcement of the Foreign Corrupt Practices Act, which prevents Americans bribing foreign government officials to win business, and the gutting of the Consumer Financial Protection Bureau (CFPB), which protects citizens against bank fraud. Then there is the 'reining in' by executive order of independent agencies including the SEC, Federal Reserve and Federal Trade Commission, whose two Democratic commissioners have been fired. These moves raise a question: what is business regulation for? In the case of the PCAOB, the answer is clear. Before the audit regulator came into being, US auditors and audit standards were largely self-regulated. The smug assumption that this was good for the profession and investors was shattered in 2001 when energy company Enron collapsed. Its auditor Andersen, riven with conflicts of interest, disintegrated. Commenting on changes in audit regulation in 2003, Charlie Munger, Warren Buffett's then-business partner and vice-chair of Berkshire Hathaway, said accounting standards had 'deteriorated faster than morality in investment banking – and I hate the first more than the second because I expected more of the accountants'. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Having at first resisted the change, big firms mostly see the value of a regulator that prevents a free-for-all and a race to the bottom in audit quality, even though they may carp occasionally about the activism of the board's current chair, Erica Williams. She said this week she was 'deeply troubled' by the draft legislation. Governments everywhere should submit regulation to regular review, pruning onerous and unreasonable rules. It is also legitimate to examine where regulators sit on a spectrum between encouraging growth and ensuring safety, as is happening in the UK. In the US, mechanisms already exist to redirect or reform regulation. When an administration changes, a change in leadership of agencies is also expected. The new SEC chair, Paul Atkins, is a conventional Republican choice, who seems set to push through a more incremental shift to lighter-touch regulation. Bigger reforms, such as abolishing the PCAOB, deserve debate in Congress, rather than be forced through as a line item. The Financial Times has outlined the dangers to financial markets posed by reckless financial deregulation in the US. Recent history shows the deeper consequences of lax supervision: after Enron's collapse, and the US and global corporate scandals uncovered in its wake, came the financial crisis of 2008 – which, incidentally, spawned the formation of the CFPB. By hacking wildly at the fences erected after those disasters, Trump and the Republicans could prompt an answer to the 'why regulate?' question, by destroying the effective competition that proportionate protection from corporate and financial malfeasance provides. FINANCIAL TIMES
Yahoo
01-05-2025
- Business
- Yahoo
PCAOB releases new machine-readable audit inspection datasets
The Public Company Accounting Oversight Board (PCAOB) has released new and enhanced datasets related to its inspection reports, offering stakeholders improved access to detailed audit information. These datasets are now available in machine-readable formats to facilitate analysis across various platforms. Covering Part I.A and Part I.B of PCAOB inspection reports, the datasets are provided in CSV, XML, and JSON formats. They encompass information dating back to 2018 for annually-inspected firms and 2019 for triennially-inspected firms. Updates to the datasets will be issued quarterly, PCAOB said. PCAOB chair Erica Williams said: 'PCAOB inspection reports have always been a data-rich resource for investors and others. 'With the release of these downloadable datasets, we are continuing our efforts to drive audit quality by increasing transparency.' Part I.A of the inspection reports highlights deficiencies in audit firms' evidence supporting their opinions on financial statements and internal control over financial reporting. This dataset includes a description of each deficiency, along with attributes such as the issuer reference key, the role of the audit firm, and the audits affected. Meanwhile, Part I.B discusses noncompliance instances with PCAOB standards or rules not directly related to the sufficiency of evidence obtained by audit firms. This dataset details each Part I.B deficiency and the corresponding auditing standard. Additionally, the PCAOB has updated an existing dataset that provides firm-level information from more than 4,000 published inspection reports. This dataset now includes more detailed information about the audits reviewed during inspections. The PCAOB's efforts to increase the availability of reliable and relevant inspection information align with stakeholders' interests, including those of the PCAOB's Investor Advisory Group and Standards and Emerging Issues Advisory Group. Recently, reports emerged that Republican lawmakers in the US are looking to dismantle the PCAOB and transfer its responsibilities to the Securities and Exchange Commission (SEC). "PCAOB releases new machine-readable audit inspection datasets" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
