January 12, 2012 / 6:21 PM / in 6 years

SEC eyes two for audit watchdog board: sources

WASHINGTON (Reuters) - Securities regulators have two leading candidates vying for a vacancy on the Public Company Accounting Oversight Board, people familiar with the matter told Reuters on Thursday.

The Securities and Exchange Commission is considering appointing either University of Tennessee professor Joseph Carcello or Jeanette Franzel, a managing director at the Government Accountability Office, these people said.

Whoever the SEC decides to tap would replace PCAOB board member Daniel Goelzer, whose term expired in October and who has served on the PCAOB board since it was founded through the 2002 Sarbanes-Oxley Act.

The PCAOB is responsible for overseeing the U.S. audit profession and it has the power to impose rules and to inspect and fine accounting firms, including the Big Four accounting firms: Ernst & Young LLP, KPMG, PricewaterhouseCoopers and Deloitte & Touche LLP.

The SEC commissioners must ultimately vote on who to appoint as Goelzer’s replacement. The candidate they select must be a certified public accountant. The law requires at least two of the five board seats to be held by CPAs.

The open board seat comes at a crucial time for the PCAOB, which over the past year has begun tightening the screws on the audit profession following what some believe was a poor performance by auditors during the 2007-2009 financial crisis.

The PCAOB is considering whether to limit the number of years an audit firm can work for the same client - an action that could break up some business relationships more than a century old. It also is considering forcing auditors to put their names on the audit reports attached to companies’ financial statements.

Reporting By Sarah N. Lynch in Washington, D.C. and Dena Aubin in New York; editing by Tim Dobbyn and Andre Grenon

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