Registered public accounting firms and auditors whose cooperation with PCAOB investigations is deemed “extraordinary” may be rewarded with reduced penalties in disciplinary proceedings.
The PCAOB issued a formal policy statement Wednesday that defines extraordinary cooperation and describes incentives for firms and individuals that make voluntary, extra efforts to aid the PCAOB during investigations.
Possible incentives include:
- Language in settlement documents noting the cooperation and its effect.
- Reduced charges or sanctions.
- In exceptional cases, a decision by the PCAOB to levy no charges or sanctions at all.
Extraordinary cooperation is defined as voluntary and timely action beyond compliance with legal or regulatory obligations, according to the policy statement. Examples include:
- Self-reporting violations. Disclosure of violations before they are discovered by the board or another regulator increases in value when the self-report occurs early.
- Remedial or corrective action to reduce the likelihood of similar violations.
- Providing substantial assistance during the PCAOB’s investigative process.
The policy is generally consistent with the board’s existing practices, according to the PCAOB.
—Ken Tysiac (firstname.lastname@example.org) is a JofA senior editor.