The $400 Million Question: Should Congress Eliminate the PCAOB?(From the Earmark Podcast)
The $400 Million Question: Should Congress Eliminate the PCAOB?(From the Earmark Podcast)  
Podcast: The Accounting Podcast
Published On: Tue Jun 10 2025
Description: Earmark Media Presents a bonus episode of Earmark Podcast:  What happens when Congress votes to eliminate the watchdog that's overseen public company audits for two decades? In this episode, Blake Oliver sits down with three leading accounting academics—Maureen McNichols from Stanford, Nemit Shroff from MIT, and Daniel Aobdia from Penn State—to examine the research behind the PCAOB's effectiveness and what elimination could mean for audit quality. You'll discover why companies with clean audit inspections can raise capital more easily, how the infamous "40% deficiency rate" actually works, and why these researchers believe dismantling the PCAOB could undermine trust in U.S. capital markets. The conversation reveals the hidden economics of audit oversight and explains why there hasn't been a major public company fraud since Enron and WorldCom.Chapters(00:00) - Welcome to the Show (01:10) - Meet the Experts (02:59) - Discussion on PCAOB's Elimination (08:17) - Research Insights on PCAOB's Effectiveness (20:11) - Deficiency Rates and Audit Quality (24:50) - Economic Impact of Fraud and PCAOB's Role (25:20) - Regulatory Model of the PCAOB (25:59) - Incentive Structure and Audit Quality (26:59) - Inspection Deficiency Rates (28:54) - Restatement Rates vs. Deficiency Rates (30:23) - Auditor-Client Relationship Tensions (31:42) - Documentation Issues in Audits (35:15) - Effectiveness of PCAOB Inspections (37:49) - Impact of PCAOB on Financial Reporting Quality (40:33) - Potential Elimination of the PCAOB (44:00) - Conclusion and Final Thoughts Sign up to get free CPE for listening to this podcasthttps://earmarkcpe.comhttps://earmark.app/Earn CPE for this episodehttps://earmark.app/c/2542Download the Earmark CPE App Apple: https://apps.apple.com/us/app/earmark-cpe/id1562599728Android: https://play.google.com/store/apps/details?id=com.earmarkcpe.appConnect with Our Guests:Maureen McNicholshttps://www.gsb.stanford.edu/faculty-research/faculty/maureen-mcnicholsNemit Shroffhttps://mitsloan.mit.edu/faculty/directory/nemit-shroffDaniel Aobdiahttps://directory.smeal.psu.edu/dza5396Connect with Blake Oliver, CPALinkedIn: https://www.linkedin.com/in/blaketoliverTwitter: https://twitter.com/blaketoliver/