PCAOB members Duane DesParte (left) and James Kaiser (right)

Two members of the Public Company Accounting Oversight Board (PCAOB) remained mum on reports of infighting, politicization and a remarkable dropoff in inspection activities, but they did say that what observers are witnessing is a long-term effort to change the organization's broader culture, according to Accounting Today. 

Last month, news broke that a whistleblower had filed a report describing an environment of internal strife within the PCAOB, which the report said was connected with an attempt to politicize the regulatory body. The whisteblowers said that much of this strife can be attributed to the chair, William Duhnke, who had long been favored by Republicans as a member. Upon his appointment in 2017, he is said to have begun actively pushing out senior leaders, and convincing them to sign nondisparagement agreements in exchange for six months of continued compensation. The whistleblowers also level the charge that the organization has retaliated against those who objected to the manner in which the terminations were done, such as an associate counsel who expressed concern that the board’s insurance policies required its leaders to consult with legal counsel before dismissing employees, which was not done. She left the agency shortly afterward. 

Not helping perceptions along these lines was when the Securities and Exchange Commission declined to renew board member Kathleen Hamm, a cybersecurity expert appointed in 2017, so that the commission could replace her with Rebekah Goshorn Jurata, who currently serves as special assistant to the president for financial policy. 

At a forum on Nov. 11, hosted by Financial Executives International, board members James Kaiser and Duane DesParte declined to answer questions about these events, saying they were personnel matters, and that the decisions were ultimately up to the SEC. But they did say that their actions as board members are part of a larger effort to change the culture of the organization itself, reporting that the human resources group has been doing a "deep dive" on it, and will be bringing its recommendations to the board shortly. They also said that they believe that each board member's term expires at the end of the year, despite this having not been the case since the board's inception, and so theoretically people could see new board members every year. Again, however, they said this is ultimately up to the SEC, and they don't "have visibility" into what the commission is thinking or will think in the future. 

It is unknown exactly what kind of cultural change the new board is seeking, how it would be implemented or whether it has to do with the exodus of senior staff that occurred shortly after the new board arrived.