Constituent Feedback on Audit Regulatory Policy: An Examination of PCAOB Comment Letters

• In Event: Continental Breakfast and Research & Education Forum
  In Paper Session: Table 4: Impact of Regulation

Abstract

In developing its authoritative guidance, the Public Company Accounting Oversight Board (PCAOB; the Board) solicits and reviews constituent feedback on regulatory policies contained in its proposed auditing standards. Little research exists that describes the agency’s feedback environment or examines constituent preferences for those initial policies. In exploring constituent comment letters submitted to all eighteen finalized PCAOB audit standards, we find that constituent feedback is robust and consistent among four constituent groups – annually inspected accounting firms (i.e., Big Four and non-Big Four), peer regulators, and state societies. Examining 138 policy positions across the proposals of various PCAOB finalized audit standards, we find idiosyncratic levels of support for and opposition to PCAOB regulatory policies across those constituent groups. Most important, we discover that the organization revises approximately half of its policy positions in subsequent final authoritative guidance after receiving constituent feedback – suggesting that the Board proactively incorporates constituent perspective into its regulation.

Authors

• Tyler Williams, University of Mississippi

• W. Mark Wilder, University of Mississippi