PCAOB's Doty Serene as Agency Sails into Trump Era


Public Company Accounting Oversight Board Chairman James R Doty has expressed no trepidation about the future of the PCAOB under the new administration.

Doty remains focused on the mission of the PCAOB—to protect investors, ensure audit integrity, and foster the trust that is needed for the markets to continue to deliver economic growth in the U.S. "in this period of change."

Doty used the phrase “in this period of change” Dec.14 in his PCAOB’s 2017 budget request of $268.5 million from the Securities and Exchange Commission. The upcoming change in administration seems a reasonable assumption of what is meant by this period of change.” 

"While priorities change over time, what should not change is recognition of the critical importance of audits and reliable financial reporting in our markets,” he testified. 

During his presidential campaign, President-Elect Donald Trump alarmed many people when he said he would "get rid of" Dodd-Frank—the sweeping legislation passed in 2010 to address problems underlying the 2008-2009 financial crisis.

Doty gave the keynote speech at the recent American Institute of CPA’s SEC and PCAOB developments conference Dec.5.

In the media scrum after his speech Doty was asked whether he was worried about the future of regulation at the PCAOB. He answered that "while he didn't know and didn't want to speculate, he hoped and believed that any administration would recognize the crucial role the PCAOB and the SEC plays."

Threats to Dismantle the Dodd–Frank Act.

In an email response to Bloomberg BNA's question about threats to dismantle the Dodd–Frank Wall Street Reform and Consumer Protection Act—that was signed into federal law by President Barack Obama in 2010—Doty wrote back:
"I am aware some have suggested amending Dodd-Frank, but no one has specifically proposed repealing the provisions that authorize the PCAOB to oversee auditors of broker-dealers."
In another answer Doty gave to Bloomberg BNA about how possible changes at the SEC might affect the Public Company Accounting Oversight Board's regulatory ability, he said, "We are a small organization, by Washington standards, with a very large mission, rooted in the Sarbanes-Oxley Act. Our oversight programs are the bedrock of investor protection for the audits of public companies, and that won’t change. We have always enjoyed strong support from the SEC and I fully expect that to continue."

Officials Leaving the SEC.

Some at the SEC are not as sanguine as Doty about the upcoming change in administration. Chair Mary Jo White—a political independent appointed by President Barack Obama—announced her intent to step down Nov. 14.

Andrew J. Ceresney, picked by outgoing Chairman Mary Jo White in 2013 to run the SEC’s enforcement division—its largest—is leaving the agency this month, according to a Dec. 8 statement.

No Midnight Regulations.

During her final Capitol Hill appearance Nov. 15, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) urged White to respect the results of last week’s election and resist the temptation to finalize any regulations, including Dodd-Frank Title VII regulations, in deference to the right of the incoming administration to set its own priorities.”

Title VII of Dodd-Frank provides a framework for the regulation of swaps and derivatives markets, which helped cause for the 2008 financial crisis.

Keith Higgins, director of the SEC Division of Corporation Finance said Nov. 18 that Hensarling’s (R-Texas) legislation to roll back the Dodd-Frank Act should be “taken seriously.”

The Financial Choice Act.

The Financial Choice Act, a bill sponsored by Hensarling that advanced in September after a 30-26 vote has proposals to eliminate Dodd Frank’s requirements for companies to disclose the ratio of their chief executive officer and median employee pay, and their use of conflict minerals and resource extraction payments.

It would be a grave mistake to weaken, let alone dismantle, these core post-crisis reforms,” White said Dec. 8 at a meeting of the SEC’s Investor Advisory Committee.

 

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