US audit watchdog bares its teeth

Link: Ex-chief accountant takes rap for SEC scandal

The oversight board was hastily set up last year, following a string of accounting scandals, led by Enron and WorldCom.

However, it was hit by scandal from the very beginning after its first chairman, William Webster, stepped down soon after being appointed, after it was discovered that he was head of the audit committee of US Technologies, a company whose financial dealings were under federal investigation.

Yesterday, chief accountants at the US Securities & Exchange Commission said the PCAOB could restore confidence, but warned: ‘If the efforts of the PCAOB fall short, and if the investing public continues to receive and rely on financial statements that fail to represent fair and accurate information, the result for our capital markets and investors will continue to be devastating.’

The board’s main role will be to oversee a new system for reviewing the work of the audit profession, replacing the failed system of self-regulation.

Yesterday the board said it would discuss critical funding needs and first steps for the registration of all firms that audit public companies.

The board is also being urged to undertake audit inspections itself, rather than delegate this responsibility.

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