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The Public Company Accounting Oversight Board announced Wednesday that deputy chief auditor Laura Phillips will step down later this year. It said Phillips had not yet accepted another position.

Phillips led the oversight body’s controversial effort to implement internal- control reporting requirements mandated by Congress in the 2002 Sarbanes-Oxley Act. Under pressure from businesses and lawmakers, the oversight board is scrapping its original audit standard and proposed a new one it hopes to finalize by midyear. The new audit standard, which must be approved by the Securities and Exchange Commission, is intended to address complaints about the cost of complying with requirement for public companies to review their internal financial-reporting controls annually and have findings undergo separate scrutiny by their outside auditor. Larger U.S. companies are already subject to the requirement and smaller firms facing it for the first time this year worry that compliance costs could be crushing.

Dow Jones Newswires: Accounting Oversight Board Senior Staffer Stepping Down

Plans by the Public Company Accounting Oversight Board to overhaul the organization’s standards for internal control audits don’t go far enough to correct the problems of the PCAOB’s original ground rules - or they go too far in watering down the original Sarbanes-Oxley Act protections for investors by yielding to powerful business groups.

Or they muddy the waters for accountants who are already swimming upstream to interpret and implement Auditing Standard No. 2, which governs audits of internal controls.

Those are some of the comments and opinions that PCAOB officials are currently sifting through after being swamped with comments from CPA firms, business executives, investor advocates and others expressing a wide range of criticisms about their previously announced plan to pare down the amount of testing necessary for SOX 404.

WebCPA: Opinions pour in on SOX 404 proposal

The SEC’s Commissioners today endorsed the recommendations of the agency’s professional staff to eliminate waste and duplication in the Sarbanes-Oxley compliance exercise, in a move that will particularly benefit smaller companies. The Commissioners urged the SEC staff to continue to work closely with the Public Company Accounting Oversight Board (PCAOB) to make the internal controls provisions of Section 404 of the Sarbanes-Oxley Act of 2002 more efficient and cost effective.

Under the Sarbanes-Oxley Act, PCAOB audit standards must first be approved by the SEC and cannot take effect without a vote of the Commission. The Commission expects the new PCAOB standard will be submitted for SEC review by the end of May or early June, in time for the 2007 financial statement audits.

SEC: SEC Commissioners Endorse Improved Sarbanes-Oxley Implementation To Ease Smaller Company Burdens, Focusing Effort On ‘What Truly Matters’

Some Accuse SEC of Pushing Accounting Board, Tilting to Business in Rules Process

Complaints are rising that the Securities and Exchange Commission is muscling an accounting oversight board in a tilt toward business interests as the two agencies fashion rules for public companies and auditors under a landmark anti-fraud law.

In recent months the SEC and the independent board that supervises the accounting industry have taken differing approaches toward the key part of the Sarbanes-Oxley law that arose from the 2002 corporate scandals: the requirement for companies to assess the strength of their internal financial controls and to fix any problems.

SEC Chairman Christopher Cox urged, in a letter to the Public Company Accounting Oversight Board last fall, that it revise its rules for outside accountants under the requirement to adapt them to the size of the company whose books are being audited.

Yahoo!:SEC Accused of Muscling Accounting Board

The Securities and Exchange Commission announced it will hold an open meeting on April 4 to discuss the Public Company Accounting Oversight Board’s proposed auditing standard for Section 404 of the Sarbanes-Oxley Act and the coordination of that proposed standard with the SEC’s related pending proposal to provide guidance for management of public companies implementing Section 404.

Both proposals were published for public comment in December 2006, and the comment periods for both proposals ended on Feb. 26, 2007.

The open meeting represents a continuation of the process announced in May 2006 by the Commission and the PCAOB to improve the reliability of financial statements public companies file with the SEC while making compliance with Section 404 more efficient and cost effective.

As part of this process, the SEC has proposed management guidance for Section 404 compliance designed to focus attention on those internal controls that present the greatest risk for a material financial misstatement. At the same time, as a companion to the proposed SEC guidance, the PCAOB has proposed a thoroughgoing revision of its existing standard for Section 404 audits.

SmartPros: SEC Schedules Open Meeting to Discuss 404 Changes

Commission announced it will hold an open meeting on April 4, to discuss the Public Company Accounting Oversight Board’s proposed auditing standard for Section 404 of the Sarbanes-Oxley Act and the coordination of the proposed changes with the SEC’s own guidance concerning implementation.

Both proposals were published for public comment in December 2006, with the comment period ending for both on Feb. 26.

In May 2006, the SEC and the PCAOB pledged to make compliance with Sarbanes-Oxley’s internal control provisions more efficient and cost effective for public companies of all sizes.

WebCPA: SEC Schedules Meeting to Discuss 404 Changes

A lobbyist for big business last week vowed to continue challenging the constitutionality of a 2002 anti-fraud law after a federal judge dismissed a lawsuit the group brought against the independent board Congress created to oversee the accounting industry.

The Free Enterprise Fund, which filed the suit in February 2006, argued that the Public Company Accounting Oversight Board violates the Constitution’s mandated separation of powers among the three federal branches because its five members are not appointed by the president, cannot be removed by him and Congress does not control the board’s budget.

delawareonline: Lobbyist pledges to fight Sarbanes-Oxley

Judge Dismisses Lawsuit Challenging Constitutionality of Accounting Oversight Board

A lobbyist for big business on Wednesday vowed to continue challenging the constitutionality of a 2002 anti-fraud law after a federal judge dismissed a lawsuit the group brought against the independent board Congress created to oversee the accounting industry.

The Free Enterprise Fund, which filed the suit in February 2006, argued that the Public Company Accounting Oversight Board violates the Constitution’s mandated separation of powers among the three federal branches because its five members are not appointed by the president, cannot be removed by him and Congress does not control the board’s budget.

But U.S. District Court Judge James Robertson wrote in a 14-page opinion that granted summary judgment in favor of the board that “the plaintiffs have brought a facial challenge to the PCAOB, presenting nothing but an hypothetical scenario of an overzealous or rogue PCAOB investigator.”

Yahoo.com: Judge Dismisses Sarbanes-Oxley Lawsuit

South Korea’s Financial Supervisory Commission, or FSC, said Tuesday it has signed a pact with a U.S. accounting body for joint inspection and investigation of Korean accounting firms that audit local companies listed on the U.S. bourses.

The agreement with the Public Company Accounting Oversight Board, or PCAOB, was spurred by the Sarbanes-Oxley Act in the U.S., which requires all accounting firms auditing corporations publicly traded in U.S. markets to register with the board and to undergo its inspections regularly, according to a statement by the FSC.

Morningstar.com: S Korea FSC, US Accounting Body Agree On Joint Watch On Accounting Cos

The U.S. Chamber of Commerce had offered up a number of recommendations for changes to the country’s legal and regulatory framework — taking aim at Securities and Exchange Commission and the Sarbanes-Oxley Act in the process.

The chamber, which lobbies for 3 million companies and more than 800 business associations, has been a vocal critic of both the SEC and SOX — going so far as to question the constitutionality of the Public Company Accounting Oversight Board, created as part of the legislation, in a lawsuit.

The chamber’s Commission on the Regulation of U.S. Capital Markets in the 21st Century issued the report Monday, and among its recommendations, says that the SEC should appoint a committee to study ways to reform and modernize the government’s regulatory approach to financial markets and market participants. As part of that reform, the chamber suggests that the SEC should be forced to consider potential costs to companies when writing new rules and that the agency should be given the flexibility to address issues relating to the implementation of SOX by making the legislation part of the Securities Exchange Act of 1934.

WebCPA: Chamber Offers Six Suggestions for U.S. Markets