For those who care about a just society and a planet that will support human life for generations to come, the Trump administration was a disaster in so many dramatic ways that the list is too long and depressing for me to contemplate. So instead let me draw your attention to its virtual gutting of the Public Company Accounting Oversight Board (PCAOB) which opened its doors in Washington, D.C. on January 6, 2003. I realize that most people haven’t heard of this seemingly obscure agency. Yet it plays an essential role in maintaining the integrity of our capital markets on which all of us depend. As noted by Lynn Turner, former Chief Accountant of the Securities and Exchange Commission, “The PCAOB is so vitally important to all Investors in American capital markets. It is who ensures we can trust the financial information necessary for making wise investment decisions.”

DENVER, COLO. – APRIL 7, 2005 – Lynn Turner, former SEC chief accountant, interviewed at The Denver Post. (Jerry Cleveland | The Denver Post) (Photo By Jerry Cleveland/The Denver Post via Getty Images) DENVER POST VIA GETTY IMAGES

Here is the stated mission of the PCAOB: “The PCAOB oversees the audits of public companies and SEC-registered brokers and dealers in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports.” What’s not to like here, right? The PCAOB was created in the Sarbanes-Oxley Act of 2002 (SOX) which was a response to the bursting of the dotcom bubble of the 1990s and a series of accounting scandals and fraud, such as Enron and WorldCom, and the collapse of the accounting firm Arthur Andersen. In essence, the PCAOB stripped self-regulation by the accounting profession of audit quality and methodologies and replaced it with a government department under the direction of the Securities and Exchange Commission and funded through SOX.  

Cynthia A. Fornelli, the first Executive Director of the Center for Audit Quality (CAQ), has written about the early turbulent years of the PCAOB and the to-be-expected criticisms of conservatives who oppose any kind of government regulation intended to improve the integrity and transparency of our capital markets. She noted, for example, that in 2009 Steve Forbes “argued that the PCAOB was ‘evil,’ ‘one of the most powerful and destructive agencies in Washington,’ and ‘an accounting version of Nurse Ratched from One Flew Over the Cuckoo’s Nest.’” My goodness! What hysterical words to describe an agency simply designed to improve audit quality for the benefit of investors, companies, auditors, and all of us.

Source link for this article