The Public Company Accounting Oversight Board (PCAOB) is finally cracking down on CPA firms that registered with the PCAOB but do not perform audits of issuers. A firm that does not perform audits of publicly traded stock (“issuers”), is not required to be inspected by the PCAOB, as the PCAOB is only concerned about protecting members of the public who trade issuer’s stock. Many of the registered CPA firms advertise that they are a PCAOB registered CPA firm. This has always been misleading to me; it’s like a furniture store advertising showing a well-priced, beautiful living room set but beneath the photo in microscopic print, it reads: “Actual Items Not as Shown.” It’s total nonsense. Here’s an idea, why not feature an advertisement that showcases the actual furniture being sold?
According to Jeanette Franzel, a PCAOB member, stated in a speech at the Association of Government Accountants Conference, “currently 923 firms are registered with the PCAOB even though they do not conduct audits that would subject them to mandatory PCAOB registration, the board is examining the extent of this practice and the risks that may arise from gaps in expectations about what a PCAOB registration may signify.”1
The risks are that the buyers, namely businesses requiring CPA services, think they are using a CPA firm that has been subjected to the rigorous inspection process performed the PCAOB. In reality, the PCAOB has no controls over regulating what this registered firm does – other than knowing that the firm doesn’t perform audits of issuers.
WS+B has gone through three such inspections, our forth is coming up in November. While we have done very well our inspections, the process is still a time consuming and nerve racking, however we are committed to servicing our clients and the SEC market
For questions, on this specific PCAOB update, do not hesitate to contact your staff or contact partner at WS+B.
1. “PCAOB Mulls Deregistering Hundreds of Accounting Firms,” Accounting Today, 7/17/2013, http://www.accountingtoday.com/news/PCAOB-Mulls-Deregistering-Hundreds-Accounting-Firms-67446-1.html