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Michael Stevenson Latest to Bid Adieu to the PCAOB

Posted on by Jason Bramwell

Another one bites the dust. This time it’s Michael Stevenson, longtime Public Company Accounting Oversight Board deputy general counsel.

Stevenson, who joined the PCAOB in 2003, had served as deputy general counsel since March 2007, according to a July 24 PCAOB press release that announced his departure. During that time, Stevenson “provided legal counsel in all areas of the PCAOB’s regulatory responsibilities and supervised the work of other attorneys in the Office of General Counsel,” the PCAOB stated.

Stevenson is also credited with helping to develop many of the PCAOB’s foundational rules, according to the press release:

He played a significant role in advising on all aspects of the PCAOB’s inspection programs, including, among other things, advising on issues relating to international cooperation and leading the successful defense of each of the Board’s negative quality control remediation determinations that were appealed. He advised extensively on enforcement and registration matters, and he also was the principal resource in the Office of General Counsel on auditor independence issues.

Before joining the PCAOB, Stevenson spent eight years at the Securities and Exchange Commission—four years in the Division of Enforcement and four years in the Legal Policy Group of the Office of General Counsel.

Since May, several high-level officials have left the PCAOB, including Martin Baumann, chief auditor and director of professional standards; Helen Munter, director of registration and inspections; and Claudius Modesti, director of the PCAOB’s Division of Enforcement and Investigations.

[PCAOB]

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PCAOB Permanently Bans Utah Accounting Firm, Ex-Managing Partner From Auditing Public Companies

The PCAOB has just made a serious example out of Bountiful (yes, it’s a town), Utah-based Chisholm, Bierwolf, Nilson & Morrill by banning the firm permanently from auditing public companies after “numerous violations of professional standards, including failure to detect fraud.” The Board also barred former managing partner Todd Chisholm for life and partner Troy Nilson for five years.

Curious about what kind of shoddy work the firm performed to get such a slap? Us too. Luckily the Salt Lake Trib has an example:

One of the companies that the firm audited was Powder River Petroleum International Inc., an Oklahoma corporation with offices in Alberta, Canada.

Until it was placed into receivership in 2008, Powder River’s public filings reported that it acquired, developed and resold interests in oil and gas properties. The company resold interest in oil and gas leases to investors in Asia, but reported those investments as income despite also promising investors a return of 9 percent until their principal was recouped, the board said.

That resulted in the company, traded over-the-counter, overstating its revenue by up to 2,417 percent, its pretax income up to 441 percent and assets up to 48 percent.

I called the PCOAB to see if this was the most severe ban every given to a firm and a CPA but couldn’t get an immediate answer. The five year ban also seems pretty severe. Doesn’t seem like too much of a stretch since the Board has only issued 36 disciplinary actions since 2005. I’ll update the post when I get some definitive answers. UPDATE: We’ve been informed that “it’s among the most severe” penalties issued.

It’s also worth noting that two of the firm’s clients – Hendrx Corp. and Jade Art Group – had substantial Chinese operations which wouldn’t be an issue if it wasn’t for this, “Chisholm, who does not speak or understand Chinese, relied on Firm assistants with Chinese language skills to identify audit issues, communicate with management and third-parties, and analyze documents provided by the issuer.”

Maybe those “assistants” were audit wizards, maybe they weren’t but either way, Mr Chisholm might be looking to change careers.

Chisholm

5 thoughts on “Michael Stevenson Latest to Bid Adieu to the PCAOB”

  1. I’m still sort of surprised that Trump and the Republicans haven’t repealed Sarbanes-Oxley yet. You’d think this would be at or near the top of the wish list for America’s corporate ghouls.

    1. Would a repeal need 60 votes in the Senate? If so, that’s probably a big hurdle.

      1. I don’t sense that Sarbanes-Oxley is a deeply partisan or hot button issue. The two guys it was named after are a Republican and a Democrat. It was passed after everyone was up in arms about Enron. Everyone has forgotten about that now (we’ve also forgotten about 2008). I’m guessing that there are at least 10 Democrats that would be willing to sell out the American people to please their corporate overlords.

        On a side note, the 60 votes thing isn’t in the Constitution. It’s a senate rule, and Mitch McConnell has no problem with changing senate rules when it serves his purposes.

    2. Trump doesn’t need to repeal it. He’ll just cut funding. That’s already causing a lot of people to leave. I had a former big 4 coworker who became a lead inspector for the PCAOB for a few years leave recently. He said it sucked once Trump took over and cut the budget for everything forcing a lot of people with a lot of big 4 experience who did big 4 inspections to leave. Now you’re left with a lot of mid-size firm people who have nowhere else to go that are stuck there doing big 4 inspections.

      1. The White House did not mandate any budget cuts for the PCAOB. Also, 90% of PCAOB inspectors are former Big 4.

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