In a public meeting held April 16, the members of the Public Company Accounting Oversight Board voted to take control of the auditing and other professional standard setting processes, effectively ending the 60+ year era of self-regulation of the profession.

"This is a sharp departure from what has happened before," said Charles D. Niemeier, acting chairman of the PCAOB. "It's not to say the auditing standards are in effect broken, but it doesn't mean they can't be improved," Niemeier said.

The Sarbanes-Oxley Act gave the PCAOB the authority to recognize any group of accountants to propose new standards, but at their meeting this week, they opted not to exercise that authority and instead took on the responsibility themselves.

The PCAOB will be forming an advisory board of 15-30 people to draft new audit standards. Equal representation on the panel – including professional accountants, financial services representatives, investor experts and corporate governance experts – is expected so that no one group has a dominant representation.

The American Institute of CPAs, the body that has, up until now, been responsible for self-regulation of the profession, is committed to working with the PCAOB, and is indicating that its members who audit registered publicly traded companies are now required to follow auditing standards as set by the PCAOB. "We are encouraged that the proposed standard setting-process will continue to involve participation, dialogue and open observation by a large and diverse group of participants," said James O'Malley, a senior vice president of the AICPA.

The plan to develop the advisory panel will be presented for public comment and eventually submitted to the SEC for approval. If adopted, the panel could be selected and begin its work as early as this fall.