Look who's talking: Due process and the PCAOB

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

Abstract

Formed to reduce the practicing auditor’s influence on auditing standards, the Public Company Accounting Oversight Board (PCAOB) fundamentally changed how public company auditing standards are created. Using comment letters submitted to the PCAOB and the Security and Exchange Commission (SEC) since 2002, we document the breadth of participation of key constituencies, including auditors, as measured by signatories. While we find both auditors and financial statement preparers submit more comment letters than financial statement users, neither individually dominates the public due process. While auditors and preparers participate at similar levels, auditors are consistent in their participation across all PCAOB audit standard settings. Preparers’ participation is more targeted to specific standards. We also examine and do not find support for the SEC’s claim that the PCAOB spends more time pursuing disclosure standards at the expense of audit performance standards. Our findings suggest the PCAOB generates input from a broad constituency, with no single interest dominating. Contrary to SEC concerns, our findings suggest PCAOB standards are focused on performance, not disclosure.

Authors

• Colleen M Boland, university of wisconsin-milwaukee

• Renee Flasher, Ball State University