Remembering Senator Sarbanes

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There were many deaths during 2020, including the passing of NASBA Chair 1995-96 Ronnie Rudd (TX), but there was another death of particular significance to the State Boards. Former Senator Paul S. Sarbanes (MD-D), who crafted the “Public Company Accounting Reform and Investor Protection Act” (the Sarbanes-Oxley Act) of 2002 with Representative Michael G. Oxley (OH-R), died on December 6 at the age of 87. That legislation, which now is commonly referred to as “SOX”, gave birth to the Public Company Accounting Oversight Board (PCAOB), among other provisions that dramatically changed CPA practice. It was passed when the scandals of Enron and WorldCom had journalists regularly asking: “Where were the auditors?” As this legislation was being created, Senator Sarbanes’ office was calling NASBA for its input on how to structure communication between state and federal regulators.

Looking at how communication between the PCAOB and the State Boards currently operates, compared to the stronger link envisioned in the early drafts of SOX, the compromises leading to the final legislation have become evident. Yet we still need to honor the late Senator Sarbanes for what he did to listen to the State Boards’ issues and to enact SOX, which has become an internationally recognized model for improving audit quality.