| April 24
April 24 Auditors and audit firms that offer
"extraordinary" cooperation to their primary U.S. regulator will
be in line for special accommodations under a policy announced
The enforcement division of the Public Company Accounting
Oversight Board, which regulates U.S. auditors, has been
criticized at times as slow moving. Under the provisions of the
Sarbanes-Oxley Act, the regulator must keep all enforcement
matters private until they reach a final review.
The new policy, which echoes a similar 2010 decree from the
Securities and Exchange Commission, could help the PCAOB
identify more cases and move more quickly, said Claudius
Modesti, PCAOB director of enforcement and investigations.
"For a firm to self-report something allows us to get on to
it sooner and mitigate the amount of damage that could be
caused, such as bad audit reports," Modesti told Reuters.
Under the policy, the PCAOB will give credit to anyone who
comes forward early and voluntarily reports violations or
quickly moves to correct and prevent problems.
For example, a firm that reports misconduct by a partner
before the PCAOB ferrets it out, or someone who reports on
attempts to hide information from PCAOB audit inspectors, could
find that the watchdog board takes a lighter hand, Modesti said.
In exchange for coming forward to the PCAOB, auditors might
hope for reduced charges or sanctions, and possibly a decision
by the regulator not to take disciplinary action at all.
Since the PCAOB was created by the Sarbanes-Oxley Act of
2002, the board has revoked the registration of 27 audit firms
and barred or suspended 50 individual auditors from auditing
public companies. The regulator has filed less serious sanctions
against a number of other firms as well, including two of the
so-called Big Four, Ernst & Young and Deloitte.
In addition, the PCAOB is currently litigating cases
involving 19 parties, though the details are confidential,
Such cases take years to build without inside cooperation,