The Securities and Exchange Commission continues to revamp the Public Company Accounting Oversight Board in the wake of a series of scandals, naming a new chairperson and three new board members.
Earlier this week, the SEC named Erica Williams to serve as chair of the PCAOB, which oversees the audits of public companies to protect investors. While Williams joins the PCAOB from law firm Kirkland and Ellis, she also spent more than a decade in various roles at the SEC, including as deputy chief of staff to three former SEC chairs and as assistant chief litigation counsel in the SEC’s Division of Enforcement trial unit. Williams also worked in the Obama administration as an adviser on financial and economic policy issues.
The SEC also named three new members, Christina Ho, Kara Stein, and Anthony Thompson, to the five-person board, leaving in place only one previous member, Duane DesParte, who had served as the acting chairperson since the ouster of the PCAOB’s previous chairperson, William Duhnke, in June.
The overhaul comes after a turbulent transition for the board from the Trump administration to the Biden administration. When Duhnke was dismissed this summer, SEC chair Gary Gensler said that the PCAOB was adequately fulfilling its role of “auditing the auditors.” The SEC is now reportedly investigating whether Duhnke violated any rules in his handling of internal complaints while an official report criticized the board’s feuding members for “bad communications and bad chemistry.”
New member Stein served as an SEC commissioner from 2013 to 2019, Ho is a former Treasury Department official who most recently worked at Elder Research, and Thompson is currently chief administrative officer of the Commodity Futures Trading Commission.
“With these additions to the Board, the PCAOB will have the leadership to meet the mission given to it by Congress. Erica, Christina, Kara, and Tony have demonstrated deep commitment to public service,” said Gensler in a statement announcing the changes. “They will represent the interests of investors and the public at the PCAOB. I would like to thank Duane DesParte for his valuable service as acting chairperson during the last several months, and I am pleased that he will stay on as a key member of the Board.”
The Sarbanes-Oxley Act of 2002 established the PCAOB to oversee the audits of public companies and registered broker-dealers through registration, standard-setting, inspection, and disciplinary programs. Under the Act, the Commission selects members and the Chairperson of the Board. The Board is subject to oversight by the SEC.
Choppy Waters
The last several years have been difficult for the audit watchdog. The board is still trying to put a cheating and inspections scandal behind it. In 2019, the SEC charged KPMG LLP with altering past audit work after receiving stolen information about inspections of the firm that would be conducted by the PCAOB. The SEC’s also found that numerous KPMG audit professionals cheated on internal training exams by improperly sharing answers and manipulating test results. KPMG paid a $50 million fine to settle the charges.
More recently, several groups accused the Trump-era members of the PCAOB of neutralizing the audit watchdog and allowing the board to become completely ineffective. In a letter to SEC chair Gensler in May a group of progressive groups and consumer advocates called on the SEC to fire members of the PCAOB, saying the board has “collapsed into a pattern of non-enforcement and retaliation against whistleblowers“ and had lost important staff members under former President Donald Trump. Signatories to the letter included Revolving Door Project, Americans for Financial Reform, Public Citizen, Greenpeace U.S., and Demand Progress. The letter said Trump appointees had allowed the PCAOB to “atrophy” and threw agency operations into “chaos,” the letter said, citing lengthy vacancies and resignations of key staff.
The new members of the board will have a tall order to rebuild trust in the PCAOB and return it to its previous role as a respected audit oversight mechanism. 
Joseph McCafferty is editor and publisher of Internal Audit 360°