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State Board Report

May 2015

Once again a bill, that would make hearings by the Public Company Accounting Oversight Board (PCAOB) and all related notices, orders and motions transparent and available to the public unless otherwise ordered by the PCAOB, was introduced by Senator Jack Reed (D-RI) and Senator Chuck Grassley (R-IA) on April 23. "The PCAOB Enforcement Transparency Act of 2015" aims to make the PCAOB’s procedures akin to the SEC’s Rules of Practice for similar matters in making available to the public hearings and related notices, orders and motions.

The Senators pointed out that the PCAOB oversees more than 2,400 auditing firms that are registered with it, plus thousands of audit partners and staff members who contribute to those firms’ audit work. Parties subject to the PCAOB’s disciplinary proceedings must give their consent for public disclosure of the proceedings on their alleged wrongdoings. This kind of constraint does not apply to the SEC, the Department of Labor, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission and the Financial Industry Regulatory Authority, among others, according to Senator Reed’s address to Congress. "PCAOB Chairman James Doty has repeatedly stated in testimony provided to both the Senate and House of Representatives over the past two years that the secrecy of the proceedings ‘has a variety of unfortunate consequences’ and that such secrecy is harmful to investors, the auditing profession and the public at large," Senator Reed stated.

Noting that the PCAOB’s "secret proceedings" are also shielded from Congress, Senator Reed said this makes it "difficult, if not impossible, to effectively evaluate the Board’s oversight of auditors and audit firms, and its enforcement program."

This bill was first introduced in 2011.

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