Democratic Senators Press PCAOB on High Audit Flaw Rates and Question PCAOB's Role as Industry Watchdog

On October 9, 2024, Democratic Senators Elizabeth Warren and Sheldon Whitehouse sent a letter to the PCAOB, criticizing the PCAOB’s effectiveness and ability to protect public company investors. Senators Warren and Whitehouse noted that the percentage of audits with serious deficiencies has increased from 40% in 2022 to 46% in 2023, calling these findings “disturbing,” and emphasized that the PCAOB’s attribution of these rates to “more isolated incidents” and outliers is “troubling.” Further, Senators Warren and Whitehouse said these high deficiency rates raise questions about “the entire auditing process that underpins the public’s investment in publicly traded companies,” and that either the standards under the Sarbanes-Oxley Act are “inadequate—or the PCAOB is failing to establish accountability for firms that do not meet them.”

The letter requested narrative responses to various questions about the tools that the PCAOB has to hold auditors accountable, civil penalties, and plans to provide audit quality, among other topics.

A PCAOB spokesperson said that the PCAOB would respond to the senators.

The letter can be found here.