I'll be the first to admit that I have little patience looking for things, a trait that has annoyed my better half for nearly a quarter-century. Whether it be missing socks, a screwdriver or last month's bill from Home Depot, I usually require the use of a GPS to locate it.
Apparently those lawmakers who crowed incessantly about how the 2,300-page financial reform bill would prevent conditions that led to the current economic crisis are about as skilled as I am at the art of lost and found.
The Dodd-Frank Wall Street Reform and Consumer Protection Act is a piece of legislation that will "ensure that something on the scale of AIG never happens again." I'm paraphrasing our chief executive.
Sort of like the financial reform version of the Speaker's pledge to "drain the swamp" regarding dubious ethics among lawmakers.
I could ask why a massive reform bill didn't bother to "reform" the bleeding twins known as Fannie Mae and Freddie Mac, which collectively have siphoned off nearly $150 billion courtesy of the taxpayers and, unlike, the recently capped BP well, promise to keep on gushing.
Those who promised greater transparency also must have missed the provision in the bill that allows the Securities and Exchange Commission to veto information requests from the public under the four-decade-old Freedom of Information Act. I'm not exactly sure how that provision aligns with the promised mantra of greater transparency, but conversely, I was pleased with a pair of recent efforts from the Public Company Accounting Oversight Board.
The first was a petition to allow the audit overseer's disciplinary hearings of accountants and accounting firms, along with the related proceedings, to be made public. The second is a strategy to crack down on supervision failures at audit firms, and not just audit deficiencies, and impose sanctions on firms that don't adequately supervise their staffs.
With the former, Acting PCAOB Chairman Daniel Goelzer has instructed the PCAOB's staff to draft a congressional proposal requesting the change to the Sarbanes-Oxley Act. Currently the disciplinary hearings are kept confidential as required by SOX.
However, under current law, firms and auditors litigating with the PCAOB have little or, in most cases no, incentive to consent to public proceedings, which is probably the time when information gleaned from a deficient audit report would be of the most use to the public. Goelzer rightfully argued that under the current format, all interested and affected parties are more or less "kept in the dark" about how the PCAOB deploys enforcement authority, or whether there is a settlement or sanction.
With regard to the latter effort, the audit overseer issued a two-part release last month that highlighted the SOX provision that authorizes the board to sanction registered audit firms and their management who have failed to supervise subordinates who have committed audit violations. Apparently, PCAOB inspections have uncovered the not-so-surprising fact that the supervisory processes at audit firms is, in many cases, wanting. The PCAOB is mulling whether such rules would further the public interest and protect investors, and is currently soliciting public comments.
But I'll weigh in now and point to the board's recent efforts as an example of transparency that was not all that hard to find.
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