Regulators vowed to move swiftly to help ease burdens on public companies after hearing a litany of complaints yesterday about the cost of new corporate accountability rules.
The Public Company Accounting Oversight Board, which oversees the work of auditors, could issue language designed to help eliminate confusion about the requirements, spur accountants to use better judgment and streamline reviews of corporate financial controls by May 16, its chairman said.
William J. McDonough, chairman of the accounting oversight board, said regulators are paying attention to complaints about compliance costs.
(Jay Malliln -- Bloomberg News)
"It's very clear the American people have been saying, 'It's a wonderful idea, but it costs too much,' " William J. McDonough told reporters. "We're attentive to that."
William H. Donaldson, chairman of the Securities and Exchange Commission, said, "I'd be very disturbed if we didn't find things we could do," after listening to a series of panelists decry the costs of the new rules and what they described as the overbearing way in which some auditors are implementing them.
Donaldson said he would instruct the agency's staff to present recommendations for change soon. Moving quickly is important because large firms already are beginning to work toward next year's reviews.
Regulators did not offer specific details about their plans for streamlining controversial aspects of the 2002 Sarbanes-Oxley Act, which Congress passed after a series of accounting scandals hurt investors.
But the wish lists of corporate panelists centered on a few key ideas: giving small and large companies more lenient deadlines, requiring auditors to focus their efforts on especially risky areas, and instructing them to rely more on internal auditors to avoid duplicating work. Several attendees at the day-long meeting also advocated spreading out different aspects of the reviews across several years.
The central issue, said lawyer John J. Huber, is whether auditors will continue to focus on small lapses rather than major weaknesses that could lead to potential financial disasters.
But investor advocates argued that accountants, for the most part, have not gone too far and that making wholesale changes could be "extremely dangerous to investors," in the words of AFL-CIO associate general counsel Damon A. Silvers.
"As we see it, the auditors are calling it right from an investor's perspective," Lynn E. Turner, a managing director in the Denver office of Glass, Lewis & Co., a proxy advisory firm.