Accounting firms are pushing back against proposed SEC regulations that would require them to publicly disclose information about their audit teams, including staff experience, workload, and training hours. Firms argue that the metrics lack context and could mislead investors.
Accounting firms are battling new rules that would force them to reveal details about their audit workforce, arguing that investors might misinterpret the information. The Public Company Accounting Oversight Board (PCAOB), which oversees the accounting profession, approved these disclosure requirements in November. However, they can't take effect unless the Securities and Exchange Commission (SEC) gives its approval. The SEC has received a wave of letters opposing the new rules.
Shareholders typically vote on the appointment of a company's auditor annually. Investor groups have long pushed for standardized information to compare firms and guide their voting decisions, according to the PCAOB. Under the proposed rules, accounting firms would have to disclose the experience level and distribution of their audit teams, including how much work is done by senior partners versus junior staff. They would also have to reveal the overall workload of senior professionals involved in a company's audit, along with annual training hours. Accounting firms contend that these metrics offer limited insight into the quality of an audit and are susceptible to misunderstanding without additional context. Deloitte, in a letter to the SEC, stated, 'The value of the metrics is speculative and may in fact confuse investors and other stakeholders, rather than benefit them.' CohnReznick echoed this sentiment, saying, 'No two firms are identical as are no two issuer audits.' Some firms argue that sharing these metrics with a company's audit committee, rather than making them public for shareholders, would be more appropriate, as the committee ultimately appoints the auditor
Accounting Audit SEC Regulations Transparency Investor Relations
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