CPAs Threatened With a Lower Bar for US Audit Sanctions (1)

Auditors whose missteps lead to failures in a firm’s compliance systems or undermine its independence could be held personally accountable, under proposed rules the US audit regulator released on Tuesday.

The Public Company Accounting Oversight Board voted unanimously to issue a draft rule change that would lower the liability threshold from reckless to negligent for the regulator to pursue enforcement cases against partners whose actions, or inactions, lead to audit failures. The proposal resurrects a standard the board considered but ultimately scrapped when it first approved the rule in 2005.

If adopted, the rule change would give the board the ...