Friday, December 23, 2011

NASAA Supports Transparency in PCAOB Disciplinary Proceedings

The North American Securities Administrators Association (NASAA) has supported provisions in the proposed PCAOB Enforcement Transparency Act of 2011 (S. 1907) that would amend the Sarbanes-Oxley Act of 2002 to make disciplinary proceedings of the Public Company Accounting Oversight Board (PCAOB) open to the public. In a comment letter to leaders of the Senate Banking Committee, NASAA wrote that the non-public nature of PCAOB disciplinary proceedings has serious adverse consequences for the investing public, audit committees, the auditing profession, the PCAOB and other interested parties.

NASAA observed that Congress established the PCAOB in order to protect investors and further the public interest in the preparation of informative, fair and independent audit reports on the financial statements of public companies. NASAA believes that adjudicatory proceedings to determine whether an auditor or audit firm should be sanctioned for violating applicable rules form an important part of the PCAOB's oversight authority. Unlike disciplinary proceedings of other, comparable regulators, however, current law provides that PCAOB cases may not be made public until they are appealed to the SEC.

NASAA reminded the lawmakers that making the PCAOB's disciplinary proceedings "open to the public" was among the goals that NASAA had articulated in its Pro-Investor Legislative Agenda for the 112th Congress. Accordingly, NASAA believes that the enactment of S. 1907 will achieve this objective.