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Last month, the House Financial Services Committee voted to move forward with legislation that would abolish the PCAOB and assign its responsibilities to the SEC.  That legislation is receiving pushback from Democrats on Capitol Hill and from PCAOB Chair Erica Williams.  In a recent post on The Audit Blog, Dan Goelzer added his voice to those arguing that the PCAOB deserves to be saved:

The PCAOB, mainly through its inspection program, has been the catalyst for major improvements in public company auditing. The Sarbanes-Oxley Act created the PCAOB in 2002 to stem the crisis in investor confidence in financial reporting that followed the dramatic collapses of Enron, WorldCom, and other financial reporting failures.

Sarbanes-Oxley was a bipartisan effort that passed the Senate unanimously and with only three negative votes in the House. The PCAOB has done the job it was created to perform. During the 20-plus years that the Board has been operating, restatements have declined, accounting firms have become more focused on audit quality, and significant breakdowns in audited financial reporting have become far rarer.

Dan goes on to say that he doubts that the SEC could perform the PCAOB’s functions as effectively given how much else the agency has on its plate, and contends that audit quality and auditor oversight are important enough to be the responsibility of an organization that focuses exclusively on those issues. He argues that even if the SEC could eventually re-create inspections and standard-setting functions comparable to what the PCAOB is currently doing, it would take several years to do so and would result in considerable disruption and lack of continuity.

– John Jenkins