Compliance Week reports that SEC Chair Mary Jo White, speaking before the Investor Advisory Group of the PCAOB, said that the SEC plans to Issue a concept release in early 2015 “exploring possible avenues for elevating the work of public company audit committees.” The release is expected to address many of the issues that the PCAOB is examining, particularly those relating to the relationship between the audit committee and the independent auditors. White emphasized that she “’can’t overstate the importance of the audit committee functioning at the highest possible level.’”
According to the article, a PCAOB working group report “lament[ed] some weaknesses in the relationship between auditors and audit committee.” In that regard, the report “asked the PCAOB and the SEC to consider whether the audit committee should report on its role in the financial reporting supply chain along with the CEO, CFO, and audit firm, and whether auditors or someone else should be required to assess and report on the duties and operational effectiveness of the audit committee. The group also posed questions about whether an evaluation of the audit committee should be reported privately to the board or publicly to shareholders, and whether [the] auditor should…assess the objectivity of the audit committee.”
Other recommendations made at the meeting related to audit quality, the auditor business model and auditor incentives. The article reports that former SEC chief accountant, Lynn Turner, suggested that the SEC should eliminate the audit requirement altogether, leaving to the shareholders the question of whether or not an audit should be undertaken: “He surmises investors will demand audits, which would make them the clients of the audit firms, perhaps redirecting auditors to put investor interests foremost when conducting the audit.” Seriously? We’ll have to wait to see.