A report bashing the PCAOB for lax oversight of the Big 4 appears to contradict recent poll results reported by the Center for Audit Quality (CAQ).
CAQ said Sept. 18 that 83% of U.S. retail investors are confident that public company auditors are effective in their investor protection roles, according to the 2019 Main Street Investor Survey.
“Healthy investor confidence is critical at all levels, from the biggest asset managers to people saving in their 401(k),” says CAQ Executive Director Julie Bell Lindsay in a statement. “Our survey shows that retail investors in the U.S. have healthy and consistent levels of confidence in both our capital markets system and in the public company auditing profession.”
The survey polled U.S. retail investors with at least $10,000 in the capital markets through retirement plans or direct holdings. The findings say that 76% have confidence in U.S. companies that are publicly traded, and that 78% express confidence in audited financial statements, up three points from 2018.
By contrast, the Project on Government Oversight (POGO), an independent watchdog, said in a report earlier this month that its analysis of PCAOB annual inspection reports showed the board has been too lenient and has done “a feeble job” policing the Big 4.
POGO says that only 18 enforcement actions resulted from 808 cases in which the Big 4 performed audits that were “so defective that the audit firms should not have vouched for a company’s financial statements, internal controls or both.” The report says, “It has taken disciplinary action over only a tiny fraction of the apparent violations its staff has identified. Meanwhile, the financial penalties it has imposed pale into insignificance compared to the fines it apparently could have imposed.”
In its 16-year history, only $6.5 million in fines have been issued when it could have fined the audit firms more than $1.6 billion, according to the report, How an Agency You’ve Never Heard of is Leaving the Economy at Risk.
“It’s unacceptable that the agency is taking such a light-handed approach in holding these large audit firms accountable,” POGO’s executive director, Danielle Brian, said in a news release, adding, “By failing to hold the Big 4 accountable, the board is putting all Americans’ financial futures in jeopardy.”