Michael Rapoport reports in the Wall Street Journal on the waning James Doty era at the PCAOB and that he will probably exit with unfinished business:
Mr. Doty, chairman of the Public Company Accounting Oversight Board, may only have months left to pursue his wish list, including a change that would require auditors to tell companies’ investors more of what they discovered during their audits. He has already served more than a year beyond the official end of his term and the coming Trump administration, which will decide whether to reappoint him, is interested in rolling back regulation, not creating more.
Paul Gillis noted back in November that the Securities and Exchange Commission under Trump, "bodes poorly for Doty, who I expect will be replaced by someone […] who will first agree to take the teeth out of the PCAOB." It's hard to disagree since Doty has been a thorn in the side of the BIG AUDIT for his entire tenure. After some initial resistance — namely, getting Congress involved over auditor rotation — the Big 4 came around on Doty and started working with him although I doubt very much that they liked it.
Under Trump's SEC, the firms will get to do whatever they want again. Not only is Doty likely to be replaced, Jay Hanson's spot will need to be filled as well after his resignation last month. This leaves the door open to a much more Big-4-friendly PCAOB.
Which is too bad! First, the value of the auditor's opinion has been in question for some time, making Doty's quest for an expanded audit report worthwhile. Second, a tough (albeit imperfect) regulator isn't a bad thing.
Now, if you keep a copy of Atlas Shrugged on your nightstand, then you'll think that's unmitigated nonsense. But if you have decent taste in books and a slightly open mind, then you know that unfettered Big 4 auditors can be lax at best and flat out dangerous at worst. Their commitment to investors is tenuous and the PCAOB is a necessary check even if their punitive ability is limited. And considering the situation we're about to find ourselves in — i.e. our country being led by an internet troll — it'd be nice to know that someone is out there still keeping an eye on the auditors while everything else gets set on fire.
Anyway, it was a good run, J. Dot. Hopefully things don't get totally blown up.
[WSJ]
