Progress and Update Report on Advisory Committee on Accounting Profession's (ACAP) Recommendations by the PCAOB's Investor Advisory Board's Working Group

Abstract

In May 2007, Secretary of the Treasury, Henry M. Paulson announced the Department of Treasury was establishing the Advisory Committee on the Auditing Profession (ACAP) to consider and develop recommendations relating to the sustainability of the auditing profession. The Advisory Committee was comprised of 21 members. The members included a former Federal Reserve Chairman, a former Securities and Exchange Commission (SEC) Chairman, former SEC Chief Accountants, attorneys, auditors, corporate board members, businesspersons, and representatives of investors. The ACAP held numerous meetings and public hearings during 2007 and 2008. ACAP considered both, oral and written submissions in its deliberations. It published and exposed a draft report for comments. On October 6, 2008, the ACAP issued its final report and recommendations. Those recommendations were directed to various organizations: the SEC, the Public Company Accounting Oversight Board (PCAOB), and the American Institute of Certified Public Accountants (AICPA), the American Accounting Association (AAA), and the National Association of State Boards of Accountancy (NASBA). The charge of our Working Group was to document and provide commentary on the degree of progress made to date on each of the ACAP recommendations contained in its Final Report issued on October 6, 2008. The Committee offered thirty-one recommendations in three key areas: (1) Human Capital, (2) Firm Structure and Finances, and (3) Concentration and Competition. To deliver on its mandate, our Working Group adopted a two-pronged approach to gather information. One, we conducted our own research from publicly available sources. Two, we sent letters to NABA, PCAOB, U.S. Department of Treasury, AICPA, AAA and the SEC soliciting their response to document the progress that each has made on recommendations applicable to them. This technical report is the outcome of this research.

Keywords: ACAP, PCAOB, Human Capital, CPA Firm Structure and Finances, CPA Firm Concentration and Competition, Investory Advisory Group

JEL Classification: M40, M42, M48, M49