March 19, 2007

Banking Expert Recommends Ombuds for Accounting and Securities Industries

In a recent speech to the National Association of Business Economists, Alex J. Pollock recommended creating ombuds for the Public Company Accounting Oversight Board (PCAOB) and the Securities and Exchange Commission (SEC).
Insuring checks and balances is a fundamental principle of sound government. This principle should be applied in Sarbanes-Oxley reform by creating an Ombudsman in the PCAOB. This is also a provision of Congressman Garrett's reform bill.
The Ombudsman should report directly to the Chairman and be available to all accounting firms or companies to discuss any disputes, complaints, or suggestions concerning the activity of the PCAOB. These discussions must be on a completely confidential basis, to avoid the possibility of retribution from the regulatory staff.
Creating the Ombudsman function is also desirable for the SEC, where I believe the fear of retribution from the regulatory staff is an even more serious problem.

Pollock, a resident fellow with the American Enterprise Institute (AEI), said ombuds could alleviate the unintended consequences of the Sarbanes-Oxley Act: unproductive cost, paperwork and bureaucracy. (AEI.)

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