U.S. Sens. Elizabeth Warren (D-MA) and Sheldon Whitehouse (D-RI) are calling on the Public Company Accounting Oversight Board (PCAOB) to set stricter rules for accounting firms with “unacceptable” deficiency rates.
Last year, according to the senators, the PCAOB reviewed more than 200 accounting firms’ audits and found that 46 percent had significant errors. The errors were so significant that that auditor “had not obtained sufficient appropriate audit evidence to support its opinion” about a public company’s financial statements and financial reporting.
The PCAOB is charged with overseeing the audits of public companies to protect investors and provide the public, but Warren and Whitehouse said these findings reveal major concerns and cast doubts on the auditing process.
“[T]he findings of this new analysis reveal a nearly complete failure [by PCAOB], indicating that investors and the public essentially face a coin flip when it comes to whether they should believe and trust the results of public companies’ audits,” wrote Sens. Warren and Whitehouse in a letter to the PCAOB.
The senators are seeking clarification about how the PCAOB plans to hold auditors accountable for ongoing problems by Oct. 23.
“The PCAOB must do better…Either [auditing] standards are inadequate—or the PCAOB is failing to establish accountability for firms that do not meet them. These are unacceptable failures by the PCAOB,” concluded the lawmakers.