U.S. Audit Watchdog Adds Staff to Catch Up on Setting Standards

Nov. 19, 2019, 6:08 PM

The U.S. audit regulator plans to add staff to oversee the rollout of three new standards in 2020 and write new rules, catching up on a long-stagnant process.

The Public Company Accounting Oversight Board’s 2020 budget also includes additional funding to modernize the regulator’s data security and information technology systems, building on investments made this year. The budget priorities aim to address criticism the agency has moved too slowly, both in modernizing and writing new rules for auditors.

The PCAOB approved its $284.7 million spending plan, a 4% increase, and reaffirmed its five-year strategic plan at a meeting Nov. 19. It sent both documents to its overseer, the Securities and Exchange Commission, which is expected to act on them at a public meeting in December.

Much of the board’s budget covers the cost of its staff and related personnel expenses, with 850 positions funded for the coming year. Support fees that public companies and registered broker-dealers pay to operate the board will total $270 million, up nearly 3%.

The board has promised to act more quickly and serve as a more agile regulator. In the two years since the SEC overhauled the board’s leadership, the PCAOB has finalized just two standards: updating its rules for auditing estimates and auditors’ oversight of the work of specialists. A third—supervision of other auditor’s work including their international colleagues—was nearing adoption when all five board members were replaced but hasn’t advanced.

The two additional positions in the office of the chief auditor will help the board as it overhauls its quality control standard, which predates the board. The extra hands will also help the board as it oversees the rollout of three standards involving changes to the audit report, auditing estimates, and the use of specialists, said board member Duane DesParte.

“There remains a significant number of interim standards adopted by the PCAOB when the doors opened in 2003,” said board member Jay Brown. “We continue to work hard at updating these interim standards and I look forward to additional progress in the coming year.”

Staff levels in the division of inspections are expected to remain unchanged, Brown said.

The board has targeted audit firms’ internal quality control systems as its next standard-setting project. A concept release is expected in December.

Investors, accountants and the U.S. Chamber have all urged the board to tackle what they describe as outdated rules in ethics and core auditing techniques, saying they are outdated.

To contact the reporter on this story: Amanda Iacone in Washington at aiacone@bloombergtax.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Vandana Mathur at vmathur@bloombergtax.com

To read more articles log in. To learn more about a subscription click here.