Edith Orenstein wondered out loud yesterday on FEI if the PCAOB is returning to its activist agenda of yore. Short of Jim Doty occupying the audit room with a bullhorn and a sign, what exactly does an "activist" PCAOB look like?
Although the PCAOB dropped its proposal for audit firm rotation, the audit watchdog has maintained, if not accelerated, what some may view as an ‘activist’ agenda. Among the items targeted for action between now and the end of March, 2015, according to PCAOB’s current standard-setting agenda, are:
- Reproposal to be issued on: Auditor’s Reporting Model
- Staff consultation paper to be issued on: Going Concern
- Staff consultation paper to be issued on: Use of Specialists
- Supplemental Request for Comment to be issued on: Improving Transparency Through Disclosure of Engagement Partner and Certain Other Participants in Audits
- Proposal to be issued on: Supervision of Other Auditors and Multi-location Audit Engagements
- Adoption of final rule on: Framework for Reorganization of PCAOB Auditing Standards
In my view, although the engagement partner disclosure proposal (FKA – or formerly known as – “engagement partner signature”) is arguably the best known of the above proposals in the corporate financial reporting world, CFOs, controllers and others responsible for corporate reporting and board oversight would be well-advised to pay very close attention to the first item listed above: the reproposal of the Auditor’s Reporting Model.
Certain participants in the Investor Advisory Group think the PCAOB is being a little too activist ahead of a presidential election a whole two years off, while others — like known regulatory troll Lynn Turner — feel the PCAOB isn't doing nearly enough:
Former SEC Chief Accountant Lynn Turner, a member of the IAG and previous member of PCAOB’s SAG, implored the PCAOB staff and board to do more, saying, “I’ve been coming back here now for a decade, to these meetings, each year about this time … we’ve been either on the SAG or this group been told about things you are working on or doing… I see positive things that you’ve done on inspections, … room for improvement, transparency, but on the rest of it, I just don’t see anything, and so often I’ve had an expectation given what I’ve heard, that great things are coming out of this board, but it’s gotten so that I just don’t expect anything anymore.”
Turner then told the PCAOB and his fellow IAG members, “The [PCAOB] board hasn’t done anything big.. . interim standards become final standards because they [new standards] don’t get done… I think it’s fair for the American public to expect more from the leadership than what they are getting.. It’s become just another bureaucratic board than any other board in DC,” adding, “At this point in time, a bird in the hand is worth many, many in the bush.
If any of this interests you, you should head over to FEI and read the whole thing, then come back here to bicker about it amongst yourselves.