CFO Blog: Commentary and Opinion

As former chair of Financial Executives International, Brod noted that he and others at FEI pushed hard to get independent review of auditors written into the Sarbanes-Oxley Act. "Peer reviews were like the fox guarding the hen house. When the PCAOB came in it was the first time the audit industry was subject to any independent scrutiny."

Ironically, he says, the impact was "good and bad." The effect of this new regulation was that, from engagement partners all the way up to the head office, audit firms seemed to freeze in fear. "We thought that would be temporary," he said.

Brod went on to note that the inspection process has been "disappointingly slow," pointing out that 2003 inspection reports were reviewed in 2004 and issued in 2005. "That's not very helpful. This process has to be sped up and has to be more out in the open."

Brod added that the PCAOB inspectors might have their own audit issues. Anecdotally, he said, companies have told him that despite the PCAOB's push for integrated audits, "when they come in to do the inspections, they come in with two teams," one for financials and one for controls. "I don't know if that's still the case, but those are the sorts of things that don't seem to fit. We ought to be getting that information out in useful fashion.