Disconnect in thoughts on PCAOB performance

BVWireIssue #205-1
October 2, 2019

fair value for financial reporting
fair value, fair value measurements

The Center for Audit Quality (CAQ) reports that 83% of U.S. retail investors are confident that public-company auditors are effective in their investor protection roles, according to its 2019 Main Street Investor Survey. On the other hand, a report from the Project on Government Oversight (POGO), an independent watchdog, says that the PCAOB has been too lenient with the Big Four. In its 16-year history, only $6.5 million in fines have been issued when it could have fined the audit firms more than $1.6 billion, according to the POGO report, “How an Agency You’ve Never Heard of Is Leaving the Economy at Risk.” The PCAOB is a private-sector, nonprofit corporation created by the Sarbanes-Oxley Act of 2002 to oversee the audits of public companies and other issuers. Of interest to valuers are the PCAOB’s findings on audit deficiencies in fair value for financial reporting, which recently have been in the areas of financial instruments and business combinations.

Extra: The House has passed a bill that, if signed into law, would establish a new whistleblower program at the PCAOB that would reward people for information about potential audit rule violations and prohibit retaliation against those who share it.

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