Accounting firms that register with the Public Company Accounting Oversight Board starting next month won't necessarily be allowed to withdraw that registration at a later date, even if they cease their auditing activities. Under a new rule proposed by the board, firms targeted for investigation by PCAOB as well as those facing disciplinary proceedings will not be granted freedom to unilaterally withdraw from registration.
Generally, requests from firms to withdraw from registration (and regulation by PCAOB) will be granted within 60 days, under the proposed rule. But enforcement officials at the board are concerned that audit firms under investigation for wrongdoing will use registration withdrawal as an escape hatch to avoid PCAOB fines or other sanctions.
Under the rule proposed for public comment, accounting firms facing disciplinary action will be automatically barred from discontinuing registration with the board, and PCAOB will have authority to delay other requests for registration withdrawal by as much as two years.
At a roundtable discussion the next day, the board also served as moderator to a debate over whether external auditors could trust the information provided to them by internal auditors, and whether the internal audit team's relation to management compromises its independence.
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