Hearings by PCAOB on Big Four CPA Firms on Consumer Fraud and the Financial Crisis

Black Economic Council

National Asian American Coalition

Latino Business Chamber of Greater Los Angeles

FOR IMMEDIATE RELEASE

June 26, 2012

 CONTACT 

Mia Martinez
mmartinez@naacoalition.org

Yolanda Lewis
: yolandalewis@blackeconomiccouncil.org

(202) 559 7483

 

On Thursday, June 28th, the federal regulator known as the Public Company Accounting Oversight Board (PCAOB) will hold hearings in California on the failure of the Big Four CPA firms to protect investors and consumers from Fortune 500 corporate fraud and a future financial crisis.

The PCAOB has suggested testimony from the Black Economic Council, Latino Business Chamber of Greater Los Angeles and National Asian American Coalition. The three groups will be providing testimony on the failure of Big Four firms to provide independent audits and/or failure to follow generally accepted accounting principles and it adversely affects our nation’s consumers and homeowners. Both the Black Economic Council and Latino Business Chamber of Greater Los Angeles will be testifying at the hearing and the National Asian American Coalition was the only consumer group to provide testimony critical of the Big Four at the PCAOB’s first hearings in Washington, DC on March 21st to 22nd.

To opening commentator will be the former SEC chairman, Harold Williams. (Mr. Williams’ remarks will begin at 8:30 am.) He will be taking a very pro-consumer position relating to the adverse impact of the Big Four on protecting the integrity of our nation’s financial system. At the March PCAOB hearings, distinguished panelists, such as former Federal Reserve chairman Paul Volcker, also echoed the consumer concerns being raised by the PCAOB.

Yolanda Lewis, chief deputy for the Black Economic Council said, “California’s three largest utilities, PG&E, Edison and Sempra, have requested $17 billion in rate increases during a deep recession. It significant measure, they are relying on the accuracy of the Big Four CPA firm audits [Deloitte & Touche is the auditor for PG&E and Sempra, and PricewaterhouseCoopers is the auditor for Edison]. If the California Public Utilities Commission heeds our request for an investigation, it is likely that new CPA auditors will be installed and most of the proposed rate increases deemed unnecessary.”

Faith Bautista, president and CEO of the National Asian American Coalition said, “The foreclosure crisis that has caused 20 million homeowners to be in jeopardy of foreclosure or to be deeply underwater. In significant measure, this was the result of inadequate audits of derivatives, mortgage securities and high-risk “bets” by Big Four CPA firms.

“The Big Four audit 97 percent of all assets under the control of the Fortune 500 corporations. We have requested that the Department of Justice’s antitrust division initiate antitrust proceedings against the Big Four. We also urged that the Federal Reserve and the OCC urge new independent auditors for the 25 largest banks that are so-called ‘too big to fail’ banks.

“In the absence of new and truly independent auditors, the U.S. could become the new Greece or Ireland.”

Jorge Corralejo, chairman of the Latino Business Chamber of Greater Los Angeles said, “The Latino Business Chamber of Greater Los Angeles will be testifying through its vice chairman, Gilbert Vasquez, founder and partner at a prominent CPA firm that has always encouraged corporate America to use truly independent CPA firms. Mr. Vasquez is the former president of the California Board of Accountancy and a founder and former president of ALPFA, the Association of Filipino Professionals in Finance and Accounting. Mr. Vasquez is a strong proponent of the PCAOB’s ordering mandatory rotation of audit firms to preserve the independence of auditors.”

The hearing will begin at 8:15 am and ends at 6:30 pm. It will be held at the Hilton San Francisco Financial District, 750 Kearny Street, San Francisco, CA 94108.

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