Recent Enforcement Actions and PCAOB Auditing Standards

Published date01 January 2016
Date01 January 2016
© 2016 Wiley Periodicals, Inc.
Published online in Wiley Online Library (
DOI 10.1002/jcaf.22123
Recent Enforcement Actions
andPCAOBAuditing Standards
Roger Daniels, Roxane DeLaurell, and Robert Hogan
Investor confidence
is paramount for
capital markets.
While many differ-
ent parties play roles
in maintaining the
public trust, the pri-
mary regulators are
the Securities and
Exchange Commis-
sion (SEC) and the
Public Company Accounting
Oversight Board (PCAOB). In
general, the SEC concerns itself
with the actions of registrants
while the PCAOB’s focus is on
auditors of public firms but
with ongoing SEC oversight.
With these relationships in
mind, the SEC is positioned to
set the tone regarding enforce-
ment actions for both organiza-
tions. While each, the SEC and
the PCAOB, have separate and
distinct responsibilities, infor-
mation is commonly shared
between the two. The efforts of
the SEC Division of Enforce-
ment are summarized and high-
lighted within Accounting and
Auditing Enforcement Releases
(AAERs). In similar fashion, the
PCAOB conducts inspections
of audit firms and should any
uncovered issues not be resolved
to the PCAOB’s satisfaction the
full report from the inspection
is made public on the PCAOB’s
website. Beyond public disclo-
sure and the resulting negative
publicity, sanctions from these
regulators can be severe, up to
and including suspension from
practicing before the SEC.
In an effort to keep cor-
porate accountants and audi-
tors informed we discuss the
relation between enforcement
actions and recent PCAOB
changes to the auditing
The SECs
enforcement staff
is responsible for
conducting investiga-
tions, prosecuting
civil suits in federal
court, as well as
handling a number
of different admin-
istrative proceedings. AAERs
serve as SEC disclosure of
financial reporting related
enforcement actions concern-
ing civil lawsuits brought by
the Commission in federal
court and notices and orders
concerning the institution and/
or settlement of administrative
Over the five-year window
from 2008 to 2012 the SEC
issued AAERs impacting 116
firms or individual certified
public accountants (CPA).
These AAERs covered a num-
ber of different topics; how-
ever, 89.43% of the enforce-
ment actions over this window
addressed one of the following:
In this article, the authors provide an update on
recent activities and actions by the Public Com-
pany Accounting Oversight Board (PCAOB). In an
effort to keep corporate accountants and auditors
informed the authors discuss the relation between
enforcement actions and recent PCAOB changes
to the auditing standards. © 2016 Wiley Periodicals, Inc.
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