Auditors Escape DFA, But Come Under PCAOB Scrutiny

The New York Times reports that, unlike the Sarbanes-Oxley Act of 2002, which created the Public Company Accounting Oversight Board to oversee the work of external auditors, the Dodd-Frank Act took a hands-off approach to auditors. Nevertheless, the new PCAOB Chairman, James Doty, recently blasted auditors for failing to do the work to support their opinions for audits conducted for firms that played an integral role in the financial crisis. Doty also said that, during the 2010 audit cycle, PCAOB inspectors have identified significant problems with valuations. Some board officials believe that the secrecy associated with PCAOB investigations and disciplinary actions bodes ill for the integrity of the profession. Although the PCAOB has asked Congress to amend the law, but no action is forthcoming.