Congress introduces bill to close auditing loophole

A US Congressman has introduced a bill to close a legal loophole that allowed the tiny auditing firm of alleged fraudster Bernard Madoff to avoid scrutiny, WebCPA reported.

Paul Kanjorski, a Republican who is chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises, introduced the bill, which gives the Public Company Accounting Oversight Board the full authority to inspect, examine and discipline auditors of all broker-dealers, not just public broker-dealers, WebCPA said.

Under current law, the PCAOB is unable to inspect and examine the work of the auditors of most broker-dealers, according to WebCPA. However, as a result of a Securities and Exchange Commission decision late last year, the auditors of all broker-dealers must now register with the PCAOB.

The PCAOB recently published guidance on registering auditors of broker-dealers with the board, and the new requirements for broker-dealer financial statements being audited by PCAOB-registered firms.

The bill introduced by Kanjorski allows auditors of broker-dealers, such as Madoff’s three-person auditing firm, Friehling & Horowitz, to also be subject to disciplinary action by the PCAOB.

Read the full article:

Bill Would Beef up Broker-Dealer Auditor Oversight