The number of SEC and PCAOB accounting and auditing enforcement actions decreased in 2020 relative to 2019, but monetary settlements increased year-over year, according to a recent report from Cornerstone Research. The report, entitled “Accounting and Auditing Enforcement Activity – 2020 Review and Analysis” (here), analyzes the agencies’ publicly disclosed accounting and auditing enforcement actions between 2015 and 2020. Cornerstone Research’s April 27, 2021 press release about the report can be found here.
Continue Reading Accounting and Auditing Enforcement Actions Down in 2020 While Total Settlements Increased
PCAOB
Supreme Court Rules PCAOB Removal Provisions Unconstitutional, Upholds SOX
In a June 28, 2010 decision (here), the Supreme Court issued its opinion in Free Enterprise Fund v. Public Company Accounting Oversight Board case. This case had been widely followed because the petitioners challenged the constitutionality of the Sarbanes-Oxley Act and of the Public Company Accounting Oversight Board (PCAOB).
The petitioners prevailed…
PCAOB Reports Significant “Triennial Firm” Audit Concerns
Under Section 104(b) of the Sarbanes-Oxley Act, the Public Company Accounting Oversight Board (PCAOB) is required to inspect audit firms that regularly provide audit reports for fewer than 100 public companies “not less frequently than once every 3 years.” On October 22, 2007, the PCAOB released a Report regarding its inspections of these so-called…
The Content and Timing of the PCAOB’s Big Four Inspection Reports
The Public Company Accounting Oversight Board (PCAOB) has been the target of extensive criticism for the timing and content (or lack thereof) of the public reports for its inspections of the Big Four accounting Firms. (Prior D & O Diary posts on this issue can be found here and here.) This issue is reviewed…
PCAOB Says Auditors Should Sharpen Fraud Detection
Based on the accumulated observations of its inspections of public company audits, the Public Company Accounting Oversight Board is concerned that auditors may not be doing all they could (or even all that is required) to detect the possibility of fraud at the companies they are auditing. In a January 22, 2007 release entitled “Observations…
Looking at Auditor Liability Caps
When the Committee on Capital Markets Regulation (popularly known as the Paulson Committee) in its Interim Report (here) recommended "setting a cap on auditor liability," the Committee relied for support on the steps in that direction that have been taken by the European Commission. In its latest effort along those lines, the…
The PCAOB’s Audit Firm Inspection Reports
On January 11, 2007, the Public Company Accounting Oversight Board (PCAOB) released its annual inspection reports of Ernst & Young LLP and KPMG LLP. The reports can be found here and here. The PCAOB is required by law to annually inspect each accounting firm that audits more than 100 public companies. The agency’s…
Is SOX Unconstitutional?
On Thursday December 21, 2006, the parties to a case pending in the United States District Court for the District of Columbia will argue whether the Sarbanes-Oxley Act’s provisions establishing the Public Company Accounting Oversight Board (PCAOB) are unconstitutional. Although the case focuses on only a narrow part of the Act, it has the potential…