State Board Report

November 2008

Mark Olson, chairman of the Public Company Accounting Oversight Board, and Robert Bunting, deputy chairman of the International Federation of Accountants, were the first speakers to address a joint session of the International Accounting Regulators Forum and the NASBA Annual Meeting. Chairman Olson discussed how the PCAOB is relying on its foreign counterparts and Deputy Chairman Bunting focused on the need for cooperation among organizations to regulate globally.

“It was the audit busts of Enron and WorldCom that created a sense in Washington, DC, that the self‐regulatory profession was no longer functioning,” Chair Olson stated as he explained the history of the PCAOB. Recognizing financial markets are developing all over the world, the PCAOB issued its 4012 report that defines how the PCAOB can do inspection reports with its counterparts. “We are now expanding on the 4012 and gone to full reliance, where we are depending on the counterpart,” he stated. “We have developed an inspections capability that we would like to share.”

Mr. Olson said the International Forum of Independent Audit Regulators (IFIAR) is developing a consistent message on how the PCAOB’s counterparts can work together. In the accounting standards area, the PCAOB continues to look to work with both its domestic and international counterparts, he said, but is not moving to convergence of auditing standards yet.

IFAC Deputy President Bunting said, “Acting alone you cannot successfully regulate in the public interest.” Global organizations need “to have a process to integrate in a cooperate way.” He told the state boards, “You and NASBA are a correspondent member of IFAC.”

Mr. Bunting observed, “Many say IFAC is a regulatory body controlled by the profession: We say we are a shared regulatory model.” There is self‐regulation of the accounting profession in 40 of the IFAC member bodies. “I view state boards in most states as a shared regulatory body,” he commented, as the Governors appoint accountancy board members from the profession. In a shared regulatory system “self regulation and external regulation reinforce each other; combine to form a regulatory mix that is effective and efficient,” he explained.

Peg Cartier (IL) asked Mr. Bunting, “How important to your mission is it that state boards of accountancy be strengthened?” He responded: “To the extent that CPAs around the country are not properly evaluated, it affects the others. The lack of regulation of one ultimately impedes the reputation of all. The regulatory regime needs to be uniform and consistent throughout the country.”

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