The Securities and Exchange Commission is reportedly close to making a decision on who will become the next member of the Public Company Accounting Oversight Board.
The five board members are appointed to staggered five-year terms, but Daniel Goelzer, who was acting chairman for a time, has been serving since 2002. The top choices, according to a recent article in the Washington Post, have very different opinions on regulation of the auditing profession. Joseph Carcello, a University of Tennessee accounting professor, has been openly critical of how much leeway auditors give to corporate financial statements. He was one of the signers of a letter last year calling for changes in auditor reports, saying that the boilerplate pass-or-fail format did not provide enough information to investors.
Changes in the auditor reporting model are among the top priorities of PCAOB chairman James Doty, who has also proposed mandatory rotation of auditing firms.
The alternative candidate for PCAOB member is Jeanette Franzel, a Government Accountability Office managing director, who reportedly favors a more restrained approach at the PCAOB. She signed a GAO report back in 2003 that recommended against mandatory audit firm rotation, and in 2009 she wrote a letter commenting on another PCAOB proposal in which she recommended that the board follow earlier standards set by the American Institute of CPAs and international industry groups.
The choice of which candidate gets chosen by SEC chair Mary Schapiro and her fellow commissioners for the job could have a significant impact on how the PCAOB’s proposals for mandatory audit firm rotation, changes in the auditor’s reporting model, audit partner sign-off, and other controversial standards ultimately get decided. Apparently the decision on International Financial Reporting Standards isn't the only major accounting-related choice on their to-do list.