Why critics worry changes to PCAOB oversight could mean more fraud - Business Insider

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Who audits the auditor? The White House wants to redraw oversight for the Big Four and other accounting firms, and some critics fear that could lead to more fraud.

The Trump administration wants to fold the accounting-regulatory panel, the Public Company Accounting Oversight Board, into the Securities and Exchange Commission.simply click here to claim your deal and get access to all exclusive Business Insider PRIME content.

And even if the White House's proposal isn't enacted now, the question of whether to keep the PCAOB isn't going away. It may be an indication of where the administration would like to head if President Trump is re-elected and Republicans get full control of Congress.If the White House has its way, soon fewer people might be watching the watchmen - and some observers fear that could lead to more corporate fraud.

Independent audits help ensure that the information investors get about companies is accurate and reliable. But many fear that if the PCAOB goes away, there won't be enough pressure on auditors to make sure their audits are strong and rigorous. The inspections of audit firms in which the PCAOB currently sniffs out problems won't be as stringent, or might not be done at all, they say, and the quality of audits won't get enough emphasis at the SEC.

The proposal puzzled many observers. It's unlikely to be enacted anytime soon — it would likely require congressional action outside the budget process, to amend the Sarbanes-Oxley Act that created the PCAOB, and that action probably isn't forthcoming as long as Democrats control the House of Representatives.

But the proposal illustrates the degree to which the Trump administration has been pushing broadly to roll back financial regulation. "There's a mood in Washington right now of trying to make sure everybody in the administration is putting their shoulder to the wheel — less regulation, less accountability, more leeway for market players," Cox said.

The inspections are the PCAOB's biggest activity, and the SEC doesn't have any equivalent. Observers are worried that if the PCAOB is folded into the SEC, inspections might be fewer, or not as stringent, or might have more of a compliance, check-the-box orientation.

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Years ago, Egypt's Financial Regulatory Authority established a unit to oversee the quality of auditors' work.

There's an International Auditor (Int. Banking Regulator) that Audits the Auditor of Banks & Financial Institutions. Deloite gets Audited Every Year By the International Auditor, .ie, (Int. Banking Regulator). Deloite Audits JPMorgan Hedge Funds...

There's an International Auditor that Audits the Auditor of Banks and Financial Institutions... Deloite gets Audited Every Year By the International Auditor... Deloite Audits JPMorgan Hedge Funds...

Public accounting firms do not test for or detect fraud. They offer absolutely no assurances that the ‘audited’ financial statements of public companies are free from fraud.

Fukin Great! The ultimate loopholefrauder wants 2chng auditing/libelous/voting laws! WTF else? That abt covers the Constitutional oversight/separation of powers! 🤔 Lets see? H’bout our Freedoms? No speech (aka Media) No assmbly? Zero pursuit of any religion but Evangelicalism!

Fraud you are covering up..... Dirty Journos

If the White House is behind something, it will definitely lead to more fraud

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