The primary challenge I see internally for the PCAOB is moving from a startup to a more steady-state organization. The PCAOB ramped up quickly when it opened its doors in January 2003. Now, we're going to have to continue to adapt.
Other challenges include the continuing recruitment of talented professionals and working with firms to improve auditors' implementation of the internal control reporting provisions in a more cost-effective way.
Treasury & Risk: The PCAOB was set up to oversee potential conflicts of interest between accounting firms and corporate clients. Five years after the implosion of Enron Corp., do you feel current regulation is sufficient, or is more oversight necessary?
Recommended For You
Chairman Olson: There is a transition that the accounting profession is going through. And it is our role to monitor the extent to which what they are doing is consistent with the public policy role they are asked to fulfill. That is an important role that is adjusting as the nature of the industry changes.
During the time I have watched and observed the accounting industry, we have moved into an environment in which the audit has become a commodity product, and the accounting industry has begun looking at their fundamental business lines as revenue generators. They looked for consulting roles, tax services, and ways to generate revenue, and the superstars were those who could take those disciplines and turn them into revenue generators. We're seeing extraordinary change in an industry that you don't normally think of as highly volatile. So we have to look at our role in that context.
Treasury & Risk: There has been a fair amount of criticism directed at the costs and resources involved in compliance with Sarbanes-Oxley's Section 404. As the PCAOB revisits Auditing Standard #2, will it be able to address demands for less rigorous external audits without weakening regulation?
Chairman Olson: If you look at the Sarbanes-Oxley Act and the environment in which it was enacted, it seems to me that what Congress directed was that internal control over financial reporting is a threshold level for being a public company. As we address Auditing Standard No. #2, we look at it in the broad context of U.S. capital markets–what they provide for investors and issuers. In general, we would look at our role in that broad context. We will make revisions to the standard with the intent of keeping costs in line with the benefits of an enhanced control environment.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
