WASHINGTON, D.C.— Stephen Hall, Legal Director and Securities Specialist, issued the following statement on a joint letter from consumer protection advocates asking the Public Company Accounting Oversight Board (PCAOB) to strengthen its proposed Quality Control Standard for audit firms:

“The PCAOB is responsible for making sure the auditing profession fulfills its duty as a critical gatekeeper for accurate and complete financial statements from public companies. Those disclosures are the lifeblood of our securities markets, representing some of the most important information that investors rely on when deciding how to allocate their funds.  Unfortunately, the PCAOB’s proposed Quality Control Standard is deficient and should be strengthened to adequately protect investors from inaccurate or misleading financial statements.

“It is the PCAOB’s responsibility to ensure that audit firms perform their gatekeeping function effectively and transparently.  One of the most important ways the Board does this is through its quality control standards. It is incumbent on the PCAOB to issue quality control standards that maximize audit quality and accountability and to ensure that these principles are rigorously applied throughout the entire audit process.

“There is compelling evidence that stronger quality control standards are necessary.  As explained in the joint letter, significant deficiencies repeatedly appear in the audit process.  The PCAOB should therefore revisit this proposal with the clear objective of proposing a Quality Control Standard that better prioritizes audit quality and accountability. And it should rethink the decision not to provide investors and the public with meaningful disclosure about the structure, operation, and effectiveness of a firm’s system of quality control. Transparency and accountability go hand in hand.”

You can find the letter here.

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