It was big news in October 2011 when the PCAOB issued a critical report on Deloitte & Touche, which found fault with the firm's audit work in a host of cases in 2007.

More specifically, the report found that quality control processes were likely insufficient to ensure proper audits, charging that in nine of the 61 audits it reviewed, adequate evidence to support their opinions was lacking. But as we noted at the time, the real issue was the lack of timeliness with which this criticism was made public. That ignited a maelstrom of controversy, as some painted the PCAOB as lax on the industry.

The board has just completed a report on the effectiveness of its enforcement processes, one that the concludes that the among the board’s chief challenges are “constraints imposed on the Board by the (Sarbanes Oxley) Act itself. Of course, both PCAOB investigations and any contested disciplinary proceedings we bring are, by law under Sarbanes-Oxley, non-public unless the respondents consent to publication of our complaints and decisions.”

That privacy shield can be used by audit firms to keep proceedings under wraps, avoiding publicity. The controversy resulted in, among other things, proposed legislation, initiated with the support of the PCAOB in November, that would change the law to allow the board to make contested disciplinary proceedings public. We’ll see where that goes. The industry will likely fight it hard.

For more:
- here’s the letter from PCAOB chairman to the SEC

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