[Congressional Record Volume 169, Number 49 (Thursday, March 16, 2023)]
[Senate]
[Pages S832-S833]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REED (for himself and Mr. Grassley):
  S. 865. A bill to amend the Sarbanes-Oxley Act of 2002 to promote 
transparency by permitting the Public Company Accounting Oversight 
Board to allow its disciplinary proceedings to be open to the public, 
and for other purposes; to the Committee on Banking, Housing, and Urban 
Affairs.
  Mr. REED. Madam President, the Public Company Accounting Oversight 
Board, PCAOB, Enforcement Transparency Act, which I am reintroducing 
today with Senator Grassley, will bring needed transparency to the 
disciplinary proceedings the PCAOB has brought against auditors and 
audit firms earlier in the process.
  Nearly two decades ago, in response to a series of massive financial 
reporting frauds, including those involving Enron and WorldCom, the 
Senate Banking Committee held multiple hearings, which produced 
consensus on various underlying causes, including weak corporate 
governance, a lack of accountability, and inadequate oversight of 
accountants charged with auditing public companies' financial 
statements. Later, in a 99-to-0 vote, the Senate passed the Sarbanes-
Oxley Act of 2002 to address the structural weaknesses revealed by the 
hearings. Among its many provisions, this law called for the creation 
of an independent board, the PCAOB, responsible for overseeing auditors 
of public companies in order to protect investors who rely on 
independent audit reports on the financial statements of public 
companies.
  Today, the PCAOB, under the oversight of the U.S. Securities and 
Exchange Commissions, SEC, oversees nearly 1,700 registered accounting 
firms, as well as the audit partners and staff who contribute to a 
firm's work on each audit. The Board's ability to begin proceedings 
that can determine whether there have been violations of its auditing 
standards or rules of professional practice is a crucial component of 
its oversight. However, unlike other oversight bodies, the Board's 
disciplinary proceedings cannot be made public without consent from the 
parties involved. Of course, parties subject to disciplinary 
proceedings have no incentive to consent to publicizing their alleged 
wrongdoing, and these proceedings typically remain cloaked behind a 
veil of secrecy. In addition, the Board cannot publicize the results of 
its disciplinary proceedings until after the appeals process has been 
completely exhausted, which can often take several years.
  This lack of transparency invites abuse and undermines the 
congressional intent behind the PCAOB, which was to shine a bright 
light on auditing firms and practices, deter misconduct, and bolster 
the accountability of auditors of public companies to the investing 
public.
  Our bill will restore transparency by making hearings by the PCAOB 
and all related notices, orders, and notices, orders and motions 
transparent and available to the public unless otherwise ordered by the 
Board. This would more closely align the PCAOB's procedures with those 
of the SEC for analogous matters.
  Increasing transparency and accountability of audit firms subject to 
PCAOB disciplinary proceedings bolsters investor confidence in our 
financial markets and better protects companies from problematic 
auditors. I hope our colleagues will join Senator Grassley and me in 
supporting this legislation to enhance transparency in the PCAOB's 
enforcement process.

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