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PCAOB Chair Working to Ramp Up Enforcement, Update Standards

S.J. Steinhardt
Published Date:
Aug 17, 2023

Public Company Accounting Oversight Board (PCAOB) Chair Erica Williams has implemented many changes since she took over in January 2022, The Wall Street Journal reported.

Her agenda includes an emphasis on tougher enforcement and updating standards. That has strained staff and provoked dissent from some board members, but it has also raised morale, which suffered under the previous chair.

“This board is approaching enforcement with a renewed vigilance,” she told a conference in September. “We intend to use every tool in our enforcement toolbox and impose significant sanctions, where appropriate, to ensure there are consequences for putting investors at risk and that bad actors are removed.”

Her ambitious agenda put pressure on employees to carry out her policies out by, for example, generating a big number of enforcement cases and obtaining significantly larger fines from accounting firms and auditors than in the past,  the Journal reported, base on interviews with "people familiar with the matter." Williams has said that the PCAOB wants to increase the quality and types of cases it is pursuing, along with higher penalties. 

But morale is generally higher under her regime, current and former employees told the Journal.

“The PCAOB is mending,” said J. Robert Brown, who served as a board member from 2018 to 2021. “Under the prior board, I think there was a big morale problem, but I think that morale problem is easing.”

Her agenda has also open rifts over policy. In June, the board’s only two CPAs, Duane DesParte and Christina Ho, opposed a proposal that would require auditors to consider a company’s noncompliance with laws and regulations, including fraud.

“As we proceed one by one, I am increasingly concerned that we are establishing new auditor obligations and incrementally imposing new auditor responsibilities in ways that will significantly expand the scope and cost of audit and fundamentally alter the role of auditors,” DesParte said.

The divided vote underscored a longstanding divergence between the PCAOB’s audit professionals and staff, who are more focused on investors, usually over how much to require from auditors, according to the Journal. The Center for Audit Quality (CAQ) said the proposal went too far, while the Council of Institutional Investors said it could go further.

“For two decades, the PCAOB failed miserably to update and revise all the standards it inherited, but they still have a long way to go,” Lynn Turner, a member of the PCAOB’s investor advisory group and a former SEC chief accountant, told the Journal.

Williams has tried to improve working conditions at the PCAOB. The board takes regular employee surveys, has extended paid parental leave to 16 weeks from four, and holds group discussions to improve the culture. Eighty-four percent of staff said they would recommend the PCAOB “as a great place to work,” an internal survey found, up from 55 percent a year earlier.

“Chair Williams probably has some really good intentions to change the culture, but culture is very hard to change and will likely take years to achieve,” California Polytechnic State University Associate Professor of Accounting Kim Westermann, who has conducted research on PCAOB inspections, told the Journal.

To learn more about the latest issued and proposed guidance from the AICPA and the PCAOB, register to attend the Foundation for Accounting Education's Auditing Standards Update with Renee Rampulla Webcast on Aug. 24.


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