Institutional investors try to make auditors publicly accountable for their work.
Image from Flickr via George Redgrave
By Jesse Eisinger
By arrangement with ProPublica
An industry group which represents some of the nation’s largest investors is urging regulators not to back away from plans to require auditors to sign the financial statements they prepare for companies.
In my August 13 “Trade” column, I wrote of a struggle between the Public Company Accounting Oversight Board, which regulates the accounting industry, and the Securities and Exchange Commission over reforms to auditor disclosure. The PCAOB, and many accounting reformers and investment groups had pushed for this change.
The accounting industry and the SEC have resisted. The negotiations have been going on for years.
In a letter dated August 15, Jeff Mahoney, the general counsel for the Council of Institutional Investors, a nonprofit that represents investment organizations with more than $3 trillion in assets under management, wrote, “to express our surprise and disappointment in the report earlier this week in the New York Times that the Public Company Accounting Oversight Board has decided to dramatically weaken” the reforms.
The bodies are coming to a compromise, with final rules slated to come out next month. As part of the compromise, the accounting firms will be required to disclose who the lead audit partner is, but the partner will not be required to sign the audited financial statements, according to a person familiar with the decision. It’s not yet decided in what manner the auditing firms will disclose the lead engagement partner’s name.
Jesse Eisinger is a senior reporter at ProPublica, covering Wall Street and finance. He writes a regular column for The New York Times’s Dealbook section.