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Earmark Media Presents a bonus episode of Earmark Podcast:
What happens when Congress votes to eliminate the watchdog that's overseen public company audits for two decades? In this episode, Blake Oliver sits down with three leading accounting academics—Maureen McNichols from Stanford, Nemit Shroff from MIT, and Daniel Aobdia from Penn State—to examine the research behind the PCAOB's effectiveness and what elimination could mean for audit quality. You'll discover why companies with clean audit inspections can raise capital more easily, how the infamous "40% deficiency rate" actually works, and why these researchers believe dismantling the PCAOB could undermine trust in U.S. capital markets. The conversation reveals the hidden economics of audit oversight and explains why there hasn't been a major public company fraud since Enron and WorldCom.
Chapters
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What happens when Congress votes to eliminate the watchdog that's overseen public company audits for two decades? In this episode, Blake Oliver sits down with three leading accounting academics—Maureen McNichols from Stanford, Nemit Shroff from MIT, and Daniel Aobdia from Penn State—to examine the research behind the PCAOB's effectiveness and what elimination could mean for audit quality. You'll discover why companies with clean audit inspections can raise capital more easily, how the infamous "40% deficiency rate" actually works, and why these researchers believe dismantling the PCAOB could undermine trust in U.S. capital markets. The conversation reveals the hidden economics of audit oversight and explains why there hasn't been a major public company fraud since Enron and WorldCom.
Chapters
- (00:00) - Welcome to the Show
- (01:10) - Meet the Experts
- (02:59) - Discussion on PCAOB's Elimination
- (08:17) - Research Insights on PCAOB's Effectiveness
- (20:11) - Deficiency Rates and Audit Quality
- (24:50) - Economic Impact of Fraud and PCAOB's Role
- (25:20) - Regulatory Model of the PCAOB
- (25:59) - Incentive Structure and Audit Quality
- (26:59) - Inspection Deficiency Rates
- (28:54) - Restatement Rates vs. Deficiency Rates
- (30:23) - Auditor-Client Relationship Tensions
- (31:42) - Documentation Issues in Audits
- (35:15) - Effectiveness of PCAOB Inspections
- (37:49) - Impact of PCAOB on Financial Reporting Quality
- (40:33) - Potential Elimination of the PCAOB
- (44:00) - Conclusion and Final Thoughts
Sign up to get free CPE for listening to this podcast
https://earmarkcpe.com
https://earmark.app/
Earn CPE for this episode
https://earmark.app/c/2542
Download the Earmark CPE App
Apple: https://apps.apple.com/us/app/earmark-cpe/id1562599728
Connect with Our Guests:
Maureen McNichols
https://www.gsb.stanford.edu/faculty-research/faculty/maureen-mcnichols
Nemit Shroff
https://mitsloan.mit.edu/faculty/directory/nemit-shroff
Daniel Aobdia
https://directory.smeal.psu.edu/dza5396
Connect with Blake Oliver, CPA
LinkedIn: https://www.linkedin.com/in/blaketoliver
Twitter: https://twitter.com/blaketoliver/
Creators and Guests
What is The Accounting Podcast?
The Accounting Podcast (formerly the Cloud Accounting Podcast) is the world's #1 accounting, bookkeeping, and tax podcast! Join us weekly for a roundup of accounting news, analysis, and interviews. Plus, earn free NASBA-approved CPE credits for listening with the Earmark app. Learn more at https://earmarkcpe.com.