Public Company Accounting Oversight Board Chairman William McDonough appeared before the Senate Banking Committee for the first time on Tuesday to update the progress being made at the Board towards auditor oversight.
Overall, Mr. McDonough's report was very favorable as to progress of the board, and indicated that the accounting industry has been very cooperative thus far in working with the PCAOB in its efforts to reform the profession.
He praised the Committee for not merely judging the accounting profession, but also providing a mechanism through Sarbanes-Oxley to offer redemption. He indicated that the PCAOB is focused on facilitating that redemption of the profession's integrity.
Highlights of the testimony include:
Staffing - currently 84 full time staff have been hired, including 21 inspectors
Office space - the board has rented facilities in New York City and Washington, DC, and a technology center in northern Virginia
Public access - through it's Web site at www.pcaobus.org, the PCAOB is providing open access to its activities and initiatives
Budget - FY 2003 budget has been approved at $68 million
Funding - Funding mechanisms have been approved, calling for the largest 1000 public companies to pay for 87% of the total company fees due
Audit Firm Registration - Over 500 applications from public accounting firms had been received by the Board as of September 17
Audit Firm Inspections - Will focus on several areas including "tone at the top", partner compensation and promotion policies, communication and training practices. Limited inspections are currently underway with the Big Four accounting firms