TSCPA has been supporting HB 2842 since March. The bill makes it illegal for executives and directors of public interest entities (PIEs) to fraudulently lie to auditors. The proposal does not apply to simple, honest mistakes, of course – it only provides criminal penalties when a PIE executive knowingly misleads an auditor, with the intent of producing a false audit.
Fair enough, right? Surely no one would be opposed to making it illegal for officers to lie.
Opposition has come out of the woodwork in the last few days since HB 2842 came out of committee and onto the radar. Chief among the complaints about the bill:
We’re already regulated plenty, thank you very much. So said the financial institutions that would fall under the bill’s provisions.
Sarbanes-Oxley subjects us to federal criminal penalties for misleading our auditors – HB 2842 amounts to double jeopardy for us. That was the argument from the publicly-held companies that HB 2842 would apply to.
Our board executives are volunteers – they don’t know whether the audit representations they’re signing are true or not. This one came from representatives of police and firefighter pension funds. We respectfully submitted that if their board members can’t know if they’re signing a fraudulent report, then perhaps they shouldn’t be signing it.
Last word is that financial institutions and public companies are supportive of some language changes to the bill that we can live with. We’re not completely clear on how best to address concerns about volunteer boards signing fraudulent representations.
Stay tuned as this issue progresses.