Survey Surprises Surveyors After Finding Support for Auditor Rotation

Posted on by Caleb Newquist

In a recent survey of public companies assessing views on Sarbanes-Oxley a decade after its adoption, Protiviti also asked companies what they think of the PCAOB's recent suggestions that mandatory rotation might improve auditing. Nearly half of all survey respondents agreed that rotation would have a positive impact. Among large accelerated filers, Protiviti said 47 percent of companies were in favor of rotation, and 60 percent of nonaccelerated filers agreed with the idea as well. Even Protiviti was taken back by the numbers. “These results are somewhat surprising as it can be expensive and time consuming to change external auditors, and such an action would represent a very substantial change in the external auditor arrangements for companies,” the firm noted in its report. “Further, the limited number of global network accounting firms significantly restricts rotation options." [CW, Earlier]

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PCAOB Puts Congress On Notice; Requests Public Enforcement Proceedings

Despite the setback that was the creation of the PCAOB, the Big 4 have to be pret-tay, pret-tay, pret-tay pleased with the privacy they get when it comes to the Board’s disciplinary actions.

Perpetually-acting chair Dan Goelzer wrote a letter to the Senate Banking and House Financial Services Committees saying that by keeping the proceedings mysterio and out of the public eye. The current arrangement “gives firms and auditors an incentive to drag out litigation, sometimes for years,” and that simply won’t do.

Despite the general public’s disinterest in all things accounting (until the shit hits the fan, of course), the Board is still trying to find its place as the relatively new kid on the bureaucratic block. This request seems to be an attempt at fitting in:

The Public Company Accounting Oversight Board’s proposal would repeal a requirement that its disciplinary actions remain secret, according to a copy of the document reviewed by Dow Jones.

The public now is denied access to information about accountants that have been sanctioned or charged by the PCAOB, acting Chairman Daniel Goelzer said in an Aug. 24 letter to several members of the Senate Banking Committee and House Financial Services Committee.

Since the federal government has been all about transparency lately, it would be surprising for Congress to take the Board up on the offer. The problem is, it won’t really do much to speed anything along and transparency will remain an issue. If you remember, last month the SEC issued its final rule on the PCAOB appeals process that goes into effect next week.

That rule will: allow firms to dispute findings during the inspection process; prohibit the PCAOB from making those disputed findings public until the SEC investigation is completed and the SEC still has the option to make findings permanently private, if it so chooses.

So even if Congress is convinced that the PCAOB’s plan to make the proceedings public is utter genius , accounting firms will still be able to drag things along (and keep things secret) as they see fit.

Accounting Board Seeks Public Enforcement [WSJ]