New rule will soon be adopted for audit
A new rule that will require accounting firms to disclose the names of individual partners who work on company audits could be adopted as soon as September, the top U.S. audit watchdog said Wednesday.
The rule proposed by the Public Company Accounting Oversight Board (PCAOB) would hold auditors more accountable for their work and let investors know who is directly in charge of reviewing each company’s books.
It was initially proposed in 2011, but remained largely dormant until December last year when the PCAOB sought public comment on a revised draft of the rule.
The plan got fresh attention in part thanks to a criminal case involving a veteran KPMG auditor named Scott London, who pleaded guilty to charges he shared confidential details about companies he audited with a friend who used the information to trade.
When KPMG initially disclosed it had parted ways with the employee responsible and with two corporate audit clients, London’s identity was not immediately disclosed.
Some critics said at the time that, if the PCAOB’s rule had been in place, shareholders would have been able to check much sooner to see which other companies London audited.
In a statement, the PCAOB said on Wednesday that Chairman Jim Doty “will move forward with the transparency project to disclose the name of the engagement partner in September.”
Adoption of the rule will require a majority vote by the PCAOB board. After that, it will need to be approved by the Securities and Exchange Commission before it can go into effect.
(Reporting by Sarah N. Lynch. Editing by Andre Grenon)
Source: reuters
