A watchdog not doing its job.

 

The Public Company Accounting Oversight Board (PCAOB) was created by Congress to police some of America’s biggest and most powerful corporate auditing firms. The problem? The watchdog isn’t doing its job. For years, POGO has been raising concerns that PCAOB has been a weak enforcer of its own rules. In our analysis, we detail a recent PCAOB enforcement order that the board claims sends a “strong message,” but which has no real bite. In 2017, it came to light that accounting firm KPMG had obtained advance word about which of its audits would be inspected by the watchdog. This information enabled KPMG personnel to revise audit work papers to reduce the likelihood of inspectors finding deficiencies. Several former KPMG personnel pleaded guilty to or were convicted of crimes for their involvement in the scheme. Last month, the PCAOB issued an enforcement order against Scott Marcello, who headed KPMG’s audit business at the time, censuring him for a “failure to reasonably supervise” for his role in the scheme, and fining him $100,000. Reputational damage aside, the PCAOB’s reprimand is likely to have limited impact. The censure does not disqualify Marcello from auditing public companies, or bar him from working for firms that do. And while the $100,000 fine may sound like a lot, partners at major accounting firms can make millions of dollars a year. Under federal law, the PCAOB can fine individuals up to $750,000 for serious violations. This is just one example in a long history of weak enforcement by the PCAOB. Read the full analysis for more. Brandon Brockmyer Director of Investigations and Research Project On Government Oversight Contribute

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