Chairman’s Firing Is Latest Jolt at Troubled Financial Watchdog
The U.S.’s top accounting regulator—hobbled by a blackmail plot, a complaint over a thrown soda can, and more—is supposed to make sure auditors don’t let companies cook their books.
Illustration: Graham Roumieu for Bloomberg Businessweek
For a Washington regulator that pretty much nobody has heard of, the Public Company Accounting Oversight Board is suddenly getting a lot of attention—and for all the wrong reasons. On Friday, the U.S. Securities and Exchange Commission, which oversees the board, fired chairman William Duhnke III. This came after several weeks of progressive activists, investor advocates, and Senators Elizabeth Warren and Bernie Sanders calling for a change of leadership. Despite its obscurity, the PCAOB has a vital role: policing the auditing firms that sign off on companies’ books. Ultimately, its job is to stop frauds like Enron and WorldCom.
Those corporate accounting scandals gave birth to the PCAOB, which early in its tenure adopted the motto “restoring confidence.” Since its creation by Congress in 2002, the watchdog, nicknamed Peek-a-Boo (a play on its initials), has struggled to live up to that goal. In almost two decades, the board has brought few big cases and made little headway on one of its important responsibilities, writing standards for auditors.