Scholarship winnersThe Chattanooga chapter of the Accounting and Women's Alliance presented scholarships Wednesday to three accounting majors:* Sydney Lamb, a UTC accounting student from Tullahoma, Tenn., plans to pursue an MBA and CPA license.* Hollie Whitener, a Chattanooga native who is now an accounting intern at Decosimo, is starting her MBA program this summer.* Kaleb Tilton, an accounting student at UTC, wants to become a CPA and eventually an accounting professor.
The regulatory oversight of audit companies brought about by the Sarbanes-Oxley reform measures in 2002 took a while to take root but is now helping to improve the financial reliability of the reporting from U.S. companies, a top audit regulator said Wednesday.
Jeanette Franzel, the lone woman on the 5-member Public Company Accounting Oversight Board, said the PCAOB is helping to protect investors and consumers from inadequate or fraudulent audits of corporate financial reports.
"It was a bit of a rough ride for the board and for corporations in the early years, and we're still in our adolescence," Franzel said about her 11-year-old agency. "But I think the major audit firms have really changed and come to see that we are serious about our oversight and ensuring the integrity of these reports, which are so key to our capitalistic system."
The PCAOB was created to register, oversee, regulate and discipline audit firms that help oversee the financial reporting by publicly traded companies. Although it took a Supreme Court ruling to sustain the existence of the government oversight group, the board has taken steps to ensure the integrity of the audits upon which capital investments and lending depend, Franzel said.
The top four audit companies in the United States -- Deloitte Touche, PricewaterhouseCoopers, Ernst & Young and KPMG -- control over 98 percent of the audits of major U.S. companies.
"I see that concentration as a big risk," Franzel told nearly 300 area accountants and other business leaders during the 58th annual luncheon by the Chattanooga Accounting and Financial Women's Alliance.
Inadequate audits and accounting oversight of many major U.S. banks and other businesses a decade ago helped lead to the financial meltdown in 2008 -- the worst economic downturn since the Great Depression in the 1930s. Based upon faulty or inadequate audits and assessments of many financial deals and companies, investors and companies did not adequately assess the risk of a downturn in the housing and building industry. Ultimately the Federal Reserve Bank and Congress bailed out several major banks and corporations to avoid an even bigger economic downturn.
Congress adopted Sarbanes-Oxley in 2002 and the Dodd-Frank financial reform law eight years later to help tighten controls and better protect investors and consumers. The regulations have added to the costs and risks of preparing financial reports and critics claim they hurt business by such expenses and controls.
But Franzel said her agency assesses its rules for their costs and benefits and has issued nearly 80 disciplinary actions for fraud and egregious wrongdoing by audit firms.
Franzel is one of only two accountants and is the only woman on the 5-member PCOAB board. During her address to the Accounting and Financial Women's Alliance annual meeting in Chattanooga, Franzel urged the mostly female audience to continue to pursue higher jobs and promotions in the audit, accounting and financial industry.
"Unfortunately, the share of women and minorities in the highest ranks of our business remains too low," she said.
Although women have comprised about half of all accounting graduates from college over the past two decades, only 19 percent of the partners at accounting and auditing firms are women today. That is even less than the share in 2010.
"We need to do better," Franzel said.
Contact Dave Flessner at dflessner@timesfree press.com or at 757-6340.