PCAOB Places Limits on Controversial Decision
Last week, AccountingWEB reported on a growing controversy facing the PCAOB - the decision to allow PCAOB Chief Auditor Douglas Carmichael to continue the work he began on a number of court cases as an expert witness. Over the Memorial Day weekend, the Board placed significant restrictions on their decision, and will still allow Carmichael to testify but only if subpoenaed.
At issue are five court cases where Mr. Carmichael has been hired as an expert witness. In each instance, he has been hired by the company suing the accounting firm. Three of the Big Four accounting firms are among the defendants in the cases Mr. Carmichael is working on. It is those same accounting firms that he will have to work with in helping to set new standards, while at the same time working against them on issues involving current standards.
"It appears that some people out there think it is important that he actually receive a subpoena," said Charles Niemeier, who is serving as Acting Chairman of the PCAOB until June 11 when William McDonough takes over the role. Mr. Niemeier consulted with the other members of the Board and with Lynn Turner, a former chief accountant of the SEC, before announcing the decision.
But critics think that the Board is wrong. Dennis Beresford, a former Chairman of the Financial Accounting Standards Board and current professor of accounting at the University of Georgia, expressed ongoing concern to fellow accounting educators in a ListServe over the weekend. "Having taken the strongly independent position of deciding to set auditing standards directly rather than leveraging off of the AICPA in any way, I'm really puzzled why the Board doesn't do the right thing in this matter and require Carmichael to resign from all expert witness assignments before joining the staff of the PCAOB."
"No man can serve two masters," Mr. Beresford told the New York Times.
Mr. Carmichael has indicated that he does not foresee any conflicts of interest if called to testify, but if there were conflicts apparent, he would recuse himself from the case.
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