PCAOB to Start Reviewing Accounting Firms by Mid-2003

At its second closed-door meeting, the Public Company Accounting Oversight Board (PCAOB) spoke privately with members of the American Institute of CPAs (AICPA) and the Financial Accounting Standards Board (FASB). According to media reports, the discussions centered around the board's plans to begin collecting fees and conducting reviews of accounting firms.

Board member Kayla Gillan said the oversight board is eager to begin conducting its own investigations by next summer. Open questions include the extent to which the board will use its own staff or rely on outsiders, as well as how many firms will be inspected next year. Only the Big Four are required by law to undergo an annual review. But board member Charles Niemeier said the PCAOB wants to inspect as many firms as it can without compromising the quality of its work.

The Wall Street Journal reported that the PCAOB has a tentative plan to allow the FASB to help collect fees from companies, and public companies could begin receiving bills as early as February.

Board members said they did not discuss the matter of whether or not they would endorse the AICPA's audit standards. But they did discuss staffing and benefits for employees. The immediate priority is to fill three key posts - general counsel, chief auditor and chief administrator - and possibly an enforcement chief.

William Webster presided over the informal closed-door meeting, even though he has resigned as chairman. He is not expected to participate in the board's first formal meeting the week of January 6, 2003.