The Public Company Accounting Oversight Board (PCAOB) is proceeding with plans to necessitate auditors to investigate more thoroughly into corporate crimes and regulatory violations. The intention is to hold them more accountable for their clients’ noncompliance with laws and regulations, formally known as NOCLAR, through proposed rule modifications. The board has declared to convene a roundtable in 2024 with diverse stakeholders for discussing the comprehensive proposal released last year.
Business leaders are divided over this initiative. Jeff Mahoney, General Counsel for the Council of Institutional Investors (CII), champions the plan, referring to it as timely. Mahoney highlights that the NOCLAR proposal is not a new obligation for auditors but rather an effort by the PCAOB to fulfill its mission under the Sarbanes-Oxley Act.
On the other hand, Tom Quaadman, Executive Vice President at the US Chamber of Commerce Center for Capital Markets Competitiveness (US Chamber), argues against the proposal, viewing it as a radical transformation of the auditor’s role and responsibilities with no clear benefits to investors. He expresses worries about potential increase in audit costs and lack of significant quantitative data in the PCAOB’s proposed plan.
As this split within the business community unfolds, the dialogue at the PCAOB’s 2024 roundtable promises to be substantial, with hopes for fair representation of the varied perspectives on the proposal.