The Public Company Accounting Oversight Board could be making more changes ahead as the audit firm regulator deals with a tumultuous series of transformations in the past two years with an all new set of board members, an overhaul of much of its staff, and the recent replacement of one of its board members with a White House aide.
Two of the board members, James Kaiser and Duane DesParte, spoke Monday in New York at Financial Executives International’s Current Financial Reporting Insights conference. During a press conference following their talk, they were asked about the lack of open meetings this year, including meetings of the PCAOB’s Investor Advisory Group and Standing Advisory Group, as well as the recent replacement of board member Kathleen Hamm with a former White House aide, Rebekah Goshorn Jurata (see SEC replaces PCAOB board member with White House aide).
They declined to discuss personnel matters and accusations that the board has become politicized, noting that the Securities and Exchange Commission decides on PCAOB board members. About the Investor and Standing Advisory Groups, Kaiser said, “We should be finalizing our approach in the near future. We will be having two public meetings, one in November related to our budget, next Tuesday, and then one probably sometime in December for us to approve a concept release. So I think we’re addressing those two things. I can’t comment on matters related to the board members. The SEC appoints the board members.”
They also declined to comment on questions about a whistleblower letter that has been filed against the PCAOB, according to The Wall Street Journal, nor about the review by former SEC Chairman Harvey Pitt that has been launched in response. “We can’t comment on whistleblower matters,” said Kaiser. “We can’t specifically comment on personnel or matters related to our operations due to the confidentiality of many of those matters.”
DesParte defended the environment at the board. “I will say we value and respect our people,” he said. “We want them to feel that they are valued and respected in our organization. Certainly we listen to feedback that we are getting from our people as well as all of the other constituents that we talked about in our presentation today. So we are listening. We want to learn where we can be better. I will share with you that from my vantage point, I come into work every day and my experience is we are all focused on how do we drive improvement and audit quality. That has been the focus since I’ve joined. It continues to be the focus, and I think that is consistent across the board and across the staff.”
Kaiser contended that the changes are part of an overall transformation at the PCAOB. “The thing I would add is we began on this journey earlier this year,” he said. “We’re in the first year of a transformation, and change takes time.”
More changes are expected at the PCAOB, where the HR group is looking into the culture at the agency. “It’s really fundamentally just looking at characteristics of our culture that we want to encourage,” said DesParte. “Are there places where we want to make change? The HR organization has been doing a deep dive on that and is going to be bringing it to the board shortly.”
Stability doesn’t appear to be likely in the near term at the PCAOB. “I would say that each board member’s term expires every year, so depending upon the board member’s decision as well as the SEC’s you can see a new board member every year,” said Kaiser.
“Or not,” DesParte added. “The key thing is we don’t know. That’s something you would need to talk to the SEC about. They select the board. I don’t have visibility into what they might be thinking down the road.”
The PCAOB is still looking to fill some of the main staff jobs that have gone without a permanent official in charge in recent years. “I think the important thing we talked about is the senior staff being brought into the organization to help us move forward with the transformation, and we still have some roles to fill,” said Kaiser. “In every organization today, people come and go. That’s the world we’re in.”