'Tough Love' Approach Sought For Accounting Firms That Don’t Reform

Accounting firms should “save themselves” to restore confidence in the industry, but those that don’t clean up their practices will face tough penalties, said the head of the new accounting oversight board.
The PCAOB replaces the industry’s own regulators. It has subpoena power and the authority to discipline accountants.

Under the PCAOB’s rules, firms will be given 12 months to fix problems that show up in the board inspections. Unless the case is particularly egregious, the firm’s violations will not be made public. If the board is satisfied with the firm’s solution, no further action would be taken. If the fixes are not satisfactory, said McDonough, “Then we have to get very tough.