New SEC chair to CPAs: ‘Back to basics’

Back to the basics.

Paul Atkins, installed as SEC chair in April, hammered that home Monday when he addressed attendees of the AICPA Conference on Current SEC & PCAOB Developments in Washington, D.C.

“Our theme right now with respect to the profession is to get back to basics,” Atkins said. “We have to focus on things like integrity and objectivity and professional skepticism, which is the reason why we have auditors and accountants to begin with, of course, for protection of investors so they know how things are going.”

Atkins said that looking back at the last five years or so, he was “really shocked at the focus of some of the firms on things that I think would have completely subverted the importance of financial materiality and financial accounting.

“And that’s some of the disclosure rules that were pushed forward at the SEC to the cheers, frankly, of some of the largest firms in the profession, and that would have subverted [Regulation] S-X, [Regulation] S-K, and ultimately U.S. GAAP. And so, those things, I am looking to the profession to uphold, and if you can’t even do that in the face of pressure from the governments or of investors or so-called investors – frankly, politicized investors – I think that’s a real problem.”

In March, the SEC under then-acting chair Mark Uyeda – appointed by the Trump administration in January – announced that the commission would end its legal defense of the SEC’s first climate disclosure rules. Uyeda returned to his role as an SEC commissioner when the Trump administration appointed Atkins to the SEC chair role in April.

Atkins, during Monday’s discussion on the conference stage, addressed three other areas of focus for his back-to-basics approach.

The plan for the PCAOB

Since the formation of the PCAOB in 2002 to oversee public company audits conducted by registered accounting firms, the SEC has held oversight of PCAOB operations.

Atkins was asked to share thoughts on the PCAOB going forward in the wake of a failed legislative effort earlier in the year that would have defunded the PCAOB and transferred its activities to the SEC.

“There, we have to get back to the first principles, basic issues, of auditing,” Atkins said. “I think we have to be very mindful of independence issues and to keep focus on improving audit quality. The PCAOB has a real need to not impose unclear standards or make things needlessly complicated, as I think a couple of the proposals in the past would have done.”

Atkins mentioned the recent announcement of PCAOB board member Christina Ho’s departure and complimented her for how “she pushed for meaningful change at the board.” He also made mention of the departure of PCAOB chair Erica Williams in July.

SEC chief accountant Kurt Hohl, hired in July, followed Atkins on the stage Monday and was asked about plans to replace Williams.

“The process, we have to go through certain steps,” Hohl said. “And when you lose 43 days during a government shutdown, it probably won’t happen until late this year, early next.”

Bring crypto clarity

Digital assets may be a brave new world, but Atkins still sees a way that his “back to basics” approach applies.

“We will be focusing on bringing normalcy to that area and embracing innovation,” Atkins said. “The SEC may not have been in the past a vanguard of promoting innovation, but neither has it historically been impeding it.

“So we’re going back to our historical roots on that and look forward to working with Congress – and obviously we have been — and hopefully there will be a market structure bill coming out of the Congress.”

‘Make it cool to be a public company’

Atkins bemoaned what he sees as the decline of the registered public company.

“Between mergers and bankruptcies and whatnot, you have so many companies no longer there, and unless you have a new incoming group of companies, that population will decline, which it has,” he said.

Atkins said he is pushing a back-to-basics approach in three areas that he believes have thwarted the volume of IPOs in recent years – the “weight and cost of disclosures” in addition to concerns related to litigation and governance.

“We will scrape the barnacles off our hull so the ship can move through water much more quickly without impedance,” he said.

Atkins ended his appearance by signaling the SEC’s intention to support the accounting and auditing professions while reiterating the role that professionals play from his perspective.

“We want to make sure that you stick to what’s important,” Atkins said. “Stick to the basics. Don’t let the shiny bauble distract you. Just do what’s right by investors. That’s your crucial job.”

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.