Public Company Accounting Oversight Board Chairman James R. Doty delivered a detailed defense of his tenure on Tuesday in the keynote address at the annual auditing conference sponsored by Baruch University’s Zicklin School, stressing the PCAOB’s economic benefits and its advantages in cutting the frictional costs of doing business in the United States.

James R. Doty

Doty’s speech, however, lacked any mention of why he or the PCAOB needed defending. Although no one in the audience, which consisted of accounting industry luminaries, top regulators, and students at the New York City business school, asked about that omission. But such a question could be seen as valid in light of the results of the recent national election and Doty’s teetering position during the presidential transition period.

With the mood in Washington clearly shifting in a deregulatory direction, it’s fair to ask if that focus will soon be on the embattled controversial agency and its chairman, who has reportedly been hanging on by a thread since his term expired in 2015. From that time until the election, observers speculated about whether Securities and Exchange Committee Chair Mary Jo White would reappoint him. But with White, who was appointed by President Obama, on the way out, Doty’s hold on the office seems even more tenuous.

Worse, from Doty’s point of view, is that his escalation of PCAOB investigations of audit firms and the publication of the results have caused the U.S Chamber of Commerce and others to label the board an opponent of business — a reputation that makes it unlikely he will gain favor with the members of the incoming Trump administration.

With its constitutionality questioned by a conservative group in a 2006 lawsuit (which was ultimately decided in 2010 by the U.S. Supreme Court in favor of the PCAOB), the board’s standing could also again be challenged now that the Republicans have taken the presidency and both houses of Congress. Indeed, at least one observer, Paul Gillis, thinks that once Donald Trump becomes president, he should “ask Congress to get rid of the PCAOB.”

Writing on Nov. 14 in goingconcern, an online accounting news publication, Gillis, a professor at Peking University in Beijing, a former PwC partner, and a former member of the PCAOB’s Standing Advisory Group, added that Trump should shift the board’s inspection “to a new Office of the Chief Auditor at the SEC, a position at the same level as the Office of the Chief Accountant.”

The standard-setting function for the accounting industry should return to self-regulation under the American Institute of Certified Public Accountants, according to Gillis. The AICPA set auditing standards before the PCAOB was established in 2002 under the Sarbanes-Oxley Act.

“With a salary over $670,000, Doty is perhaps the highest paid bureaucrat in Washington, and if you are going to drain the swamp, that might be a good place to start,” Gillis wrote, referring to Trump’s campaign promise that he would “drain the swamp” of Washington bureaucrats.

In his speech, Doty said that it was clear to him “that the PCAOB needs to remain vigilant and independent because economic pressures can threaten the integrity of audits.”

Further, the oversight chief connected his agency’s vigilance over how financial reports are audited with the nation’s economic health.

“It’s the reliability of that information flow that delivers the premium that well-regulated markets enjoy,” he stressed, repeating the point for emphasis. Oversight of auditing promotes “the growth of savings, particularly retirement savings, reducing the societal costs of publicly guaranteed pensions.”

High-quality audits give investors confidence to invest, Doty noted. “Sophisticated as our markets and economy are, they’re dependent on trust. We cannot take trust for granted,” he declared, noting that the Sarbanes-Oxley Act, which created the PCAOB, “has had a profound causative effect on the quality of the audit.”

Doty went on to say that “independent oversight has changed the landscape for the better in our capital markets. Inspections have improved audits and changed [audit] firms’ attitude and execution.”

The chairman also touted the board’s enforcement efforts, which have “rooted out some bad apples [and] fostered trust in the system.” Corporate boards can now also “use our published cases to gravitate to better audits and better auditors,” he said.

Among the board’s accomplishments, Doty noted, is installing a requirement, beginning in the first quarter of 2017,  for audit firms to report the names of engagement partners and other firms involved in preparing a company’s audit report. “Such disclosure provides important signals that allow markets to reward companies that choose engagement partners on the basis of track records of quality.”

Doty praised the many auditors who have “adjusted their accounting” in response to PCAOB inspections as “the unsung heros who avert the scandals that don’t happen.” But he criticized erring firms for the “numerous instances in which firms’ audit reports should not have been issued” and thus could have avoided material misstatements.

In response to a question by Douglas Carmichael, the PCAOB’s first chief auditor and now a Baruch accounting professor, about the oversight board’s economic analysis, Doty responded: “We’re still not a part of the cost-benefit analysis [commonly required by the federal government]. We’re not a government agency. But we take it seriously.”

The PCAOB’s administrative processes include “all of the economic analysis that a responsible federal regulatory agency should have,” he contended.