Coconut Grove, Fla. (Feb. 19, 2004) -- Although the Public Company Accounting Oversight Board’s jurisdiction is limited to accounting firms, PCAOB enforcement activity will have definite spillover effect on America’s corporate boardrooms, PCAOB member Daniel L. Goelzer told a group of Florida lawyers.
As the board “moves into full operation, it will have a significant impact, not just on accountants, but also on public companies and investors,” he said in an address to the 22nd Annual Institute on Federal Securities. While accounting firms will be the main target of PCAOB investigations during 2004, Goelzer stressed that “our inspections and investigations will also affect public companies. Obviously, in order to determine whether the auditor did his or her job properly, it will often be necessary to review the audit client’s records and possibly to talk to its personnel.”
Noting that the Sarbanes-Oxley Act grants his organization power to subpoena documents from public companies, Goelzer said that if wrongdoing by an audit client is uncovered during an investigation, the evidence will be turned over to the Securities and Exchange Commission for action. Accountants, however, will be dealt with directly by the board.
When the PCAOB encounters serious violations of board standards or the securities laws by auditors under its jurisdiction, Goelzer said that the board “will not hesitate to act through its power to conduct investigations and to seek disciplinary sanctions.” Accountants who run afoul of the PCAOB can expect to be hit with fines, suspensions, and even orders barring them from auditing public companies in the future, he said.
-- Ken Rankin
