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,
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.
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