How the accounting industry and SEC hobbled America’s audit watchdog

Reuters reports: SEC Chief Accountant James Schnurr, formerly deputy managing partner at the world’s largest accounting firm, Deloitte & Touche, has used his office’s “oversight powers to block, weaken and delay” rules from the Public Company Accounting Oversight Board (PCAOB) the independent agency set up after the Enron era to oversee the accounting firms,

according to a dozen current and former SEC and PCAOB officials. Schnurr’s staff has also campaigned to have [current PCAOB head James] Doty removed from office, these people said….The standoff is a test of who holds sway with regulators in Washington – investors large and small who seek better disclosure of what really goes on inside companies, or the financial-services establishment that’s supposed to serve those investors.

In September, 29 people wrote to White urging her to reappoint Doty – including two past SEC chairpeople, former Federal Reserve Chair Paul Volcker, and John Bogle, the founder of mutual fund giant Vanguard Group.

“The accounting firms have been letting corporations get away with reporting all kinds of funny pro forma earnings,” Bogle said in an interview. “The addition of Jim Doty to the PCAOB was a big upgrade. And if the firms are angry with him, he’s clearly doing something right.”

via How the accounting industry and SEC hobbled America’s audit watchdog.

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