In a recent LinkedIn post, Christina Ho, a Member of the US Public Company Accounting Oversight Board (PCAOB), responded to criticism from Democratic Senators Elizabeth Warren and Sheldon Whitehouse.
In early October, Warren and Whitehouse sent a letter to PCAOB Chair Erica Williams criticizing the PCAOB's enforcement efforts after 46% of audits inspected in 2023 were found to be flawed. Therein, the senators also targeted Ho for her September speech to the Institute of Internal Auditors, in which she argued that the PCAOB's current approach to regulation and enforcement is at times "overzealous."
In that speech, Ho emphasized the important role that audit plays in fostering trust in public companies and markets, and noted that a lack of trust undermines the ability of regulators and government institutions to fulfill their mandate. She argued that the PCAOB has overstated the challenges facing the audit industry, as the 46% deficiency rate does not give any sense of the severity or impact of audit flaws. In so doing, Ho believes, the PCAOB risks unduly damaging the trust in the industry.
In their letter to Williams, Senators Warren and Whitehouse took issue with this characterization and warned against complacency. Ho "appears to be focused on downplaying and misdirecting attention from these atrocious findings," the Senators wrote.
Ho's LinkedIn post contended that improving audit quality is the best way to protect investors. This will not be achieved through ever-stricter enforcement, she asserted. "Fear might extract compliance, but it will not achieve audit quality," Ho wrote. “There is a significant opportunity to promote audit quality through innovation.” She called for the PCAOB to focus on “data-driven government and evidence-based policymaking, because that is how we build trust in government.”
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