New York (Sept. 15, 2004) — Predicting that “powerful” forces within the profession may ultimately lead the Public Company Accounting Oversight Board’s standards to become the standards for non-issuers as well, board member Willis “Bill” Gradison may have, at least temporarily, doused the ongoing debate about the need for differential standards.
In remarks before attendees at a Sarbanes-Oxley conference here, Gradison said that while the “Big GAAP-Little GAAP debate is alive and well,” it may not “be workable to train and supervise an audit staff on two separate sets of standards.”
“For non-SEC issuers, there are areas such as exit strategies and acquisitions, where it may not necessarily make sense for two standards,” Gradison said. “Then you could have cases where customers tell their suppliers to follow the [PCAOB] standards.”
Gradison, a former nine-term Republican congressman from Ohio and a former mayor of Cincinnati, gave an update on the current developments at the oversight board.
The PCAOB, which has a staff of 225, currently has had more than 1,300 firms go through its registration process, including 465 non-U.S. firms.
“Eighty percent of the firms we registered had less than five issuer clients,” Gradison said. “Some had no public clients.
After conducting limited inspections of the Big Four firms in 2003, Gradison said that the oversight body is currently in the midst of its 2004 inspections, which, in addition to the Big Four, includes second-tier firms BDO Seidman, Grant Thornton, Crowe-Chizek and RSM McGladrey.
When asked about the oft-mentioned costs associated with Sarbanes-Oxley, Gradison replied, “Without [SOX], the costs at the end of the day are ultimately absorbed by the shareholders. We would certainly welcome ideas on how to reduce audit costs with regard to audit quality.”
— Bill Carlino
