December 21, 2011
The Honorable Tim Johnson
The Honorable Richard Shelby
Dear Chairman Johnson and Ranking Member Shelby:
On behalf of the North American Securities Administrators Association (NASAA) I am
writing to express my support for S. 1907, the PCAOB Enforcement Transparency Act of
2011, which would amend the Sarbanes-Oxley Act of 2002 to make the Public Company
Accounting Oversight Board disciplinary proceedings open to the public.
The Public Company Accounting Oversight Board (PCAOB) was established by
Congress to oversee auditors whose reports are filed with the SEC in order to protect
investors and further the public interest in the preparation of informative, fair and
independent audit reports on the financial statements of public companies. Adjudicatory
proceedings to determine whether an auditor or audit firm should be sanctioned for
violating applicable rules or standards are an important component of the PCAOB’s
oversight authority. However, unlike the disciplinary proceedings of other, comparable
regulators, current law provides that PCAOB cases may not be made public until they are
appealed to the SEC.
NASAA has always supported transparent regulatory processes that promote efficient and
effective investor protection. The non-public nature of PCAOB disciplinary proceedings
has serious adverse consequences for the investing public, audit committees, the auditing
profession, the PCAOB and other interested parties.
The enactment of legislation to make PCAOB disciplinary proceedings initiated against
accounting firms and individual auditors “open to the public” was among the goals that
NASAA articulated in its Pro-Investor Legislative Agenda for the 112th Congress. If
enacted, S. 1907 will achieve this important objective. I therefore hope the Senate
Banking Committee will consider and approve this legislation at the earliest opportunity.
Thank you for your attention to this important issue. Should you have any questions,
please feel free to contact me or Michael Canning, Co-Director of Policy, at the NASAA
Corporate Office, at (202) 737-0900.
Jack E. Herstein
CC: Senator Jack Reed