James R. Doty, Chairman of the Public Company Accounting Oversight Board, Agrees To Remain in Place for Search and Transition Period for New Board Members
Aug. 11, 2017
The Public Company Accounting Oversight Board (“PCAOB”) is one of the centerpieces of the Sarbanes-Oxley Act of 2002 (“SOX”), and has been instrumental in improving the quality of public company audits for the protection of investors in the subsequent fifteen years. SOX provides that the PCAOB is governed by a Board of five members — two of whom must be certified public accountants, and three of whom must not be — serving for staggered five-year terms. Today, of the five PCAOB Board seats, one is vacant, two are held by members whose terms have expired, and one is held by a member whose term will expire in two months.
The PCAOB’s multimember structure promotes a diversity of viewpoints and decision-making by consensus — but it operates best in this regard when there is a full complement of Board members serving their appointed terms. Given the importance of the PCAOB to our capital markets, one of my priorities upon assuming the SEC’s Chairmanship was to initiate a process to bring the PCAOB to full strength. My fellow Commissioners share in this objective.
I am very pleased that Chairman Doty has agreed to continue to serve as the Chairman of the PCAOB as we commence the process for appointing his successor and new Board members. I believe this will ensure the continued execution of the PCAOB’s mission as the PCAOB transitions to new leadership.
Jim has been a consummate public servant since he first stepped into the role of General Counsel of the SEC in 1990. He assumed his current position as Chairman of the PCAOB in 2011, and has played a critical role in the development and success of the organization during his tenure. I have known and respected Jim for many years. His commitment to America has been unwavering and his achievements significant.
Under Jim’s leadership, the PCAOB:
- Enhanced its risk-based approach to inspections, and promoted improvements to audit quality in the audits of issuers and broker-dealers;
- Advanced several major standard-setting initiatives, including an auditing standard on communications between the auditor and the audit committee; a standard and amendments that improve an auditor’s evaluation of related party and significant, unusual transactions; rules that require the identification of the names of engagement partners as well as the other firms participating in an audit; and standards and amendments for the auditor’s report on an audit of financial statements;
- Increased its use of economic analysis, particularly in standard-setting activities, and initiated a research and conference program focused on enhancing scholarship in this important area; and
- Expanded cooperation with international counterparts in both inspections and enforcement.
I cannot thank Jim enough for the dedication, intensity, enthusiasm, and motivation he has given the PCAOB over the years. I am delighted he will be assisting us in the transition.
SOX requires that PCAOB Board members be “appointed from among prominent individuals of integrity and reputation who have a demonstrated commitment to the interests of investors and the public, and an understanding of the responsibilities for and nature of the financial disclosures required of issuers under the securities laws and the obligations of accountants with respect to the preparation and issuance of audit reports with respect to such disclosures.”
Individuals meeting the statutory criteria who would like to be considered for a Board seat should submit the following to Boardemail@example.com by September 1, 2017: (1) a cover letter, discussing the statutory qualifications listed above; and (2) a current résumé or curriculum vitae.