Transparency of Accountant Discipline Actions at PCAOBBy
Will the introduction of a Public Company Accounting Oversight Board (PCAOB) “transparency” bill in the House kick-start its voyage through Congress in 2017? The answer is maybe. For the last three Congresses, Sens. Jack Reed (D.-R.I.) and Charles Grassley (R.-Iowa) have introduced a bill that would mandate that the PCAOB make its hearings and other actions public.
The bill has never had a vote in committee. In September, Rep. Scott Garrett (R.-N.J.) introduced The PCAOB Enforcement Transparency Act of 2016 (H.R. 6251), the first time a version of the Reed-Grassley bill appeared in the House. As chair of the Financial Services Capital Markets and Government Sponsored Enterprises subcommittee, Garrett presumably had the political weight to get the bill through the House, which also might have gotten the bill moving in the Senate. But Garrett was defeated in his bid for reelection in November, casting uncertainty on the bill’s progress in 2017.
The key issue is enforcement actions against accountants fined under Section 404 of the Sarbanes-Oxley Act of 2002. The PCAOB can’t make public when it investigates a claim about accounting malfeasance or when it finds evidence to support a claim and open a formal enforcement proceeding against an auditor. The agency wants to be able to do the latter, which most other regulatory agencies can do. James Doty, chairman of the PCAOB, supports the legislation, which he says would give investors and audit committees valuable information they need.