Everybody always asks me if my Rottie, Rosie, is dangerous. She’s much older and much bigger than the one on the right. She’s three and a half years old and has gone through obedience training. She’s as mean as I need her to be and very protective, but she’s not vicious. It’s neither necessary nor inevitable for her to hurt anyone. However, I do enjoy the fact that she intimidates strangers. When we walk down the street, people cross to the other side and are often fearful as we approach. That’s as it should be. Can the PCAOB say the same about their working relationship with the audit firms?
I received a some great feedback, both on and off the blog, from my post yesterday. It seems many feel that we can rest easy, now that the profession in the US is not self regulating but regulated by the PCAOB, under the direction of the SEC. There’s an impression they’re looking at both the audits and the firms themselves.
Although they may be starting to lose their baby teeth, in reality, they’re really just a warm puppy.
Not only are investors and the public prohibited from seeing the results of the private portion of the PCAOB’s reports, but the PCAOB under Mark Olson is, in truth, reluctant to judge the management of the firms themselves. And they’re not willing to entertain any contrary views.
I asked Mr. Olson the question directly at the Compliance Week Conference last June. He clearly stated that they were sticking primarily to re viewing the quality of audits themselves.
“…the PCAOB sees itself as regulators of the audit firms with regard to audit quality, and so any additional disclosure will come only as it relates to audit quality.”
The PCAOB is full of former Big 4 partners. They are loathe to criticize their colleagues, notwithstanding any symbolic fines. And when they do try to put a little meat into their critique, they are swatted back like so many houseflies.
Does the PCAOB, in its current form, really have the cojones to dig into the firms’ relationships to the major commercial and investment banks, private equity firms and related money men? I think not. Can we be sure these relationships are not fraught with both independence and integrity problems? Can someone shed some light on the subject?