The Public Company Accounting Oversight Board will provide its full inspection reports to states that agree to honor Sarbanes-Oxley confidentiality provisions, the board's chairman told state regulators this week.
The Sarbanes-Oxley Act limits the public availability of confidential information obtained in an inspection, as well as any findings that criticize or identify potential defects in a firm's quality control systems, and gives firms up to 12 months to address criticisms or deficiencies in quality control. Under the law, if the PCAOB is satisfied with a firm's response, the criticisms or potential defects remain nonpublic.
"We have worked out a system to provide the full reports to the boards in states where the firms are licensed, pursuant to a certification that the state board will honor the confidentiality provisions of the Sarbanes-Oxley Act," PCAOB Chairman William McDonough told attendees at the annual meeting of the National Association of the State Boards of Accoutancy in Chicago on Tuesday.
McDonough said that only eight states have provided the board such certifications so far. In August, the PCAOB issued its reports on the 2003 limited inspections of the Big Four firms.
"We very much consider the state boards of accountancy as our partners in constructing a safety net for public company investors and others who use and rely on financial statements," McDonough said. "In many ways, you at the state boards of accountancy are the first line of defense as you assess the aptitude and qualifications of those who would become accountants."
Currently, 1,360 accounting firms are registered with the board, with 488 from outside the U.S.
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