SEC makes proposal to improve auditor accountability
WASHINGTON-The Securities and Exchange Commission (SEC) has proposed rules to reform auditing oversight and improve accountability of auditors of public companies. The proposal would create a new Public Accountability Board (PAB), which each SEC registrant's independent accountants must belong to. According to the SEC, the proposed system is designed to restore investors' faith in financial information and enhance the reliability and integrity of the auditing and financial reporting processes. A PAB would be comprised mainly of non-accountants, receive funding from outside the accounting industry, and be subject to SEC oversight. It would set audit, quality control, and ethics standards, and disclosure would be required if an official of any registrant were sanctioned by a PAB within the last five years. "Effective oversight of the accounting profession is critical to quality financial information and trust in and reliance on that information. By having effective oversight, investors are assured that skilled, disinterested professionals operating under high ethical standards and strict quality control procedures are auditing financial statements," the SEC proposal read. The proposal is out for a 60-day comment period.