Days before the 20th anniversary of the Sarbanes-Oxley Act (SOX), PCAOB Chair Erica Y. Williams and SEC Chair Gary Gensler discussed its impact and its future in separate virtual events.
The PCAOB, which revealed its short- and midterm projects earlier this year, used the occasion of the SOX anniversary to identify three key areas for moving its investor-protection mission forward:
- Modernizing auditing standards.
- Enhancing inspections.
- Strengthening enforcement.
“Those who break the rules should know that the PCAOB means business,” Williams said during a virtual event hosted by the Council on Institutional Investors. “We intend to use every tool in our enforcement toolbox and impose significant sanctions, including substantial penalties, to ensure there will be consequences for putting investors at risk.
“Working together, strong standards, inspections, and enforcement will reinforce each other and help keep investors protected.”
SOX chartered the PCAOB in 2002 and charged it with being the standard setter for public company audits. Gensler, who worked closely with Sen. Paul Sarbanes to develop SOX, said Congress initially allowed the PCAOB to use existing audit standards on an interim basis, but many of those standards remain on the books to this day.
In May, the PCAOB said that review and possible replacement of the interim standards is now a “midterm” project (defined as a project “where the staff is actively engaged, but board action is not anticipated in the next 12 months”).
“I look forward to these critical auditing standard updates,” Gensler said during a virtual event hosted by the Center for Audit Quality. “And while they have their work cut out, I believe Chair Erica Williams and the board can live up to Congress’s original vision with respect to standard setting. I’m hopeful we can make some progress before Sarbanes-Oxley turns 21.”