PCAOB Begins Inspections, Partner Pay to be Checked

The Public Company Accounting Oversight Board has begun inspecting America’s top eight accounting firms and its chairman put partners on notice that their compensation packages will be scrutinized.

Speaking before the a Practising Law Institute conference in Washington this week, PCAOB Chairman William McDonough said the board has begun work on the inspections of the top eight firms. The PCAOB has about 80 experienced auditors working on the inspections, which he said will include partner compensation. The board hopes to double the number of auditors by the end of the year, a board member said this week.

"We will take a look at compensation in the context of our reviews," McDonough said. "But we don't plan to issue specific standards," he added, noting the difficulty of such a move and saying because "we want good auditors to be compensated appropriately."

McDonough has been an outspoken critic of excessive executive compensation and has said the public’s outrage over the issue led to the speedy passage of the Sarbanes-Oxley Act of 2002, which created the PCAOB to clean up and watch over corporate America.

On Wednesday, PCAOB member Bill Gradison also told Dow Jones Newswires that the group's inspectors will look at partner compensation during the reviews.

"If we find a poor performer at the partner level was given the same promotions and compensation as a top quality performer, our inspectors will certainly ask questions," Gradison told Dow Jones.

The law requires that the PCAOB conduct annual inspections of accounting firms that audit 100 or more public companies, which are the eight now under inspection. Smaller firms are inspected every three years, Dow Jones reported.

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Upcoming CPE Webinars

Jul 16
Hand off work to others with finesse and success. Kristen Rampe, CPA will share how to ensure delegated work is properly handled from start to finish in this content-rich one hour webinar.
Jul 17
This webcast will cover the preparation of the statement of cash flows and focus on accounting and disclosure policies for other important issues described below.
Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.