While all this talk has been going on about the uncertain future of the PCAOB, a letter was sent on Feb. 10 to the chairs and ranking members of the House Financial Services Committee and the House Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, asking that a hearing be called for lawmakers to discuss the current mess that is the U.S. audit regulator.
The letter was sent to lawmakers by:
- American Anti-Corruption Society;
- Project On Government Oversight, which has published several reports recently about the terrible job the PCAOB is doing;
- The Signals Network;
- Brett Whitaker, former director of tax reporting at Mattel, who told the Wall Street Journal about Mattel executives and PwC auditors covering up an accounting error made in late 2017 and deciding not to disclose a material weakness or tell the toy giant’s board or CEO; and
- Mauro Botta, a former PwC auditor in Silicon Valley who filed a lawsuit against the firm alleging that he was fired in retaliation for standing up to and exposing auditor misconduct at PwC and for reporting that conduct to the SEC.
The House Financial Services Committee held a hearing in mid-January in which PCAOB Chairman William Duhnke and FASB Chairman Russell Golden testified, but lawmakers spent most of their time lambasting Golden and the FASB about the current expected credit loss (CECL) standard. Botta, Whitaker, POGO, et al. want the committee to hold a hearing focused squarely on the problems at the PCAOB:
We are writing to you today on to bring to your attention the urgency to organize a hearing in the House Financial Services Committee related to the risks for the financial market and the economy posed by the failures of major accounting firms and the Public Company Accounting Oversight Board (PCAOB), which is tasked with overseeing them. While we appreciate the Committee’s hearing on the PCAOB on January 15, 2020, the majority of the hearing was focused on the Financial Accounting Standards Board and not the PCAOB. As a result, the numerous problems at the PCAOB were not addressed. Therefore, we feel it necessary for your Committee to hold a hearing solely on the PCAOB to protect the economy and investors. …
A hearing of the House Financial Services Committee could look at the fundamental transparency, accountability, effectiveness, and conflict on interest issues at the PCAOB. Witnesses could include all relevant stakeholders including whistleblowers, regulators, civil society, and policy experts that can provide a holistic view of the critical issues facing the system. This country cannot afford another economic crisis, and the Financial Services Committee has a responsibility and duty to do everything in its power to ensure that regulators are adequately policing auditors and doing their jobs.
Here’s the full letter for your reading pleasure: