The Public Company Accounting Oversight Board today announced a cooperative agreement with the Financial Supervisory Authority of Norway for the oversight of audit work performed by public accounting firms that practice in the two regulators’ respective jurisdictions. “With this agreement, Norway’s FSA and the PCAOB are joining forces to improve audit quality and protect investors,” said PCAOB Chairman James R. Doty. “I am pleased that the PCAOB is continuing to make progress in overcoming the obstacles that have in the past prevented PCAOB inspections in Europe.” [PCAOB]
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About an hour ago the Public Company Accounting Oversight Board (PCAOB) announced a settled disciplinary […]
The PCAOB Chairman Is in It for the Money
How’s this for awkward: Mary Schapiro makes $162,000 as the big chief at the SEC. The Chairman of the PCAOB makes $672,676 a year and board members get $546,891. And just so you know, B to the H to the O makes $400k.
The Berg says that, “Salaries for PCAOB members exceed the pay for most public officials to make the jobs competitive with the private sector,” which probably explains it but cripes. That’s good scratch for sitting in meetings all day and continually telling auditors how much they suck at their jobs.
The whole subject came up in the article because Schape and Co. are trying to find a permanent chairman to replace interim chair Dan Goelzer and two retiring board members.
The lead horse is Kurt Schact, the managing director of the CFA Institute’s Centre for Financial Market Integrity. Mr. Schact has a JD and BS in chemistry from the University of Wisconsin. Candidates for the two soon-to-be vacated board seats include one CPA, Helen Munter (Deloitte) and two former SEC attorneys, Linda Griggs and John Sturc.
Does anyone see a problem here? Does anyone think for one minute, that the PCAOB will be better off with fewer auditors guiding the ship? There must not be a single qualified auditor in the entire universe that could possibly want to chair the PCAOB. Thankless job to be sure but at least the money is decent.
Anyway, the good news is that arguments for Free Enterprise Fund v. PCAOB will be heard at the SCOTUS next week. Maybe we’ll all get lucky and this appointment crap will become meaningless.
SEC Said to Consider CFA’s Schacht to Lead U.S. Auditor Board [Bloomberg]
See also: CFA Institute’s Schacht May Chair PCAOB [Web CPA]
PCAOB Publishes Part II of Deloitte’s 2008 Inspection Report, First Ever for a Big 4 Firm
They really, really, really don’t appreciate it when you blow off their recommendations. Here’s the statement from the Board:
The Public Company Accounting Oversight Board, in anticipation of questions about the publication of previously nonpublic portions of its May 19, 2008 inspection report on Deloitte & Touche LLP, issued the following statement today:
“The quality control remediation process is central to the Board’s efforts to cause firms to improve the quality of their audits and thereby better protect investors. The Board therefore takes very seriously the importance of firms making sufficient progress on quality control is n inspection report in the 12 months following the report. Particularly with the largest firms, which are inspected annually, the Board devotes considerable time and resources to critically evaluating whether the firm did in fact make sufficient progress in that period. The Board can and does make the relevant criticisms public when a firm has failed to do so.”
So to clarify, Deloitte had until May 19, 2009 to get their methods up to par but failed to do so. To put this into a little bit of context, Jim Doty was not yet the Chair of the PCAOB and Barry Salzberg was still the CEO of Deloitte’s U.S. firm. Does this mean that the PCAOB has been stepping up its game and this is the first instance of many to come? Hard to say but the audits that this inspection report cover are nearly five years old, so it’s debatable as to the value of Part II being made public now.
For Deloitte’s part, here’s current CEO Joe Echevarria’s statement:
“Deloitte is committed to the highest standards of audit quality and as newly elected CEO, it is my foremost priority. Our commitment extends from the top and cascades throughout our entire organization. We place great value on the PCAOB’s input and continue to work with the Board in support of our shared objectives. We recognize that audit quality is fundamental to protecting investors and ensuring the effective functioning of the capital markets.
“We have complete confidence in our professionals and the quality of our audits, and agree that there were and always will be areas where we can improve. In our drive for continuous improvement, we have been making a series of investments focused on strengthening and improving our practice, and will continue to do so to make Deloitte the standard for audit quality.”
In other words, a non-response response. However, it’s much more measured than Deloitte’s response to the initial release of the report. Their response letter spelled out their feelings quite clearly:
Professional judgments of reasonable and highly competent people may differ as to the nature and extent of necessary auditing procedures,conclusions reached and required documentation. We believe that reasonable judgments should not be second guessed and therefore disagree with a number of comments as indicated[.]
Deloitte’s letter is located Appendix C. You can read the full report, including all the details from Part II that were previously unpublished, on page 2.