“The PCAOB is responsible for ensuring that auditors of public companies meet the highest standards of quality, independence, and ethics," said Reed at the time. "Reliable financial reporting is vital to the health of our economy and we must take the legislative steps necessary to enhance transparency in the PCAOB’s enforcement process.  Currently, Congress, investors, and others are being denied critical information about an auditor’s disciplinary process.  Investors and companies alike should be aware when the auditors and accountants they rely on have been charged or sanctioned for violating professional auditing standards.”

Bloomberg said that this new requirement has caught the Big Four by surprise, and they are reportedly trying to get the requirement scaled back, although there is little time to do so before the provision comes into effect. According to Bloomberg, the Defense Department has yet to offer details on how it intends to implement the requirement. Each of the Big Four firms has done business with the Pentagon to some degree or another. They have argued that the provision is broad and will put audit firms at a competitive disadvantage compared to other consultants; they are also concerned that the disclosures will be visible to the public, which could then be seized upon by short sellers, or simply reveal sensitive information about employees and audit clients. On the other hand, Sen. Reed, who was responsible for the provision, said that taxpayers have a right to know that the Defense Department is selecting the most qualified auditors, and knowing the extent of past disciplinary proceedings is a vital part of that transparency effort.