The Public Company Accounting Oversight Board plans to impose more sanctions on accounting firms and managers that don’t adequately supervise their staff.

Daniel Goelzer

The PCAOB issued a two-part release on Thursday discussing a provision of the Sarbanes-Oxley Act that authorizes the board to levy the sanctions on firms and their supervisory personnel who fail to reasonably oversee associates who violate specific laws, rules and standards. In the release, the PCAOB highlighted the scope of the provisions in Sarbanes-Oxley authorizing the board to sanction registered firms and their supervisory personnel who fail to adequately manage associated persons who commit such violations.

The second part of the PCAOB release also discussed possible rulemaking and standard setting that would require firms to make and document clear assignments of the supervision responsibilities that are already required to be part of any audit practice.

“Through its inspections and investigations, the PCAOB has observed that supervision processes within firms are frequently not as robust as they should be, and that supervisory responsibilities are often not as clearly assigned as they should be," said PCAOB acting chairman Daniel L. Goelzer. "Today's release seeks to highlight the board’s views on the scope for using the authority provided in the act to address those problems." 

The PCAOB is considering whether such rules would further the public interest and protect investors by increasing clarity about who, within a firm, is accountable for various responsibilities that bear on the quality of a firm’s audits. The PCAOB is soliciting public comment on the concepts discussed in Part II.  The comment period is open until Oct. 4, 2010.