Era of Self Regulation Comes to an End

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.

You may like these other stories...

Recently, there has been a lot of buzz about the future of continuing professional education (CPE). The American Institute of CPAs (AICPA) created a task force on the Future of Learning with an accompanying fancy website. In...
Accountants who specialize in forensic and valuation services point to electronic data analysis, or big data, as the most pressing issue they’ll face in the coming months, according to results of a new survey released...
The American Institute of CPAs (AICPA) sent two letters to IRS Commissioner John Koskinen – one on May 21 and another on June 24 – asking that the tax-collection agency not put in place a voluntary education...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.