WSJ June 28 2024
Sometimes when Christina Ho speaks, it sounds as if the auditing profession is headed to a dark cell in the far corner of an Excel spreadsheet.
Ho has voted against more potential rules than anyone in the two-decade history of the Public Company Accounting Oversight Board, which regulates the auditing of U.S. public companies. The PCAOB, as it is known, was set up as part of the Sarbanes-Oxley Act of 2002, in response to accounting scandals at Enron and WorldCom.
As a member of the five-person board, Ho doesn’t think auditing needs to be reined in as aggressively as some of her colleagues. She recently opposed major rules, saying they impose undue burdens on auditors and deter new entrants into the field amid a shortage of auditors and accountants.
Ho, 52 years old, is one of only three board members ever to vote against a proposed rule. By contrast, at the Securities and Exchange Commission, which oversees the PCAOB, dissenting votes are common.
“I have done many jobs where the work may not be popular,” said Ho. “If I believed I was doing the right thing, I would move forward.”
Anyone involved in public-company audits is paying close attention to the board and Ho right now. Auditors are objecting to recent board proposals, particularly one on fraud detection that they say requires skills and legal expertise that go far beyond their professional abilities. Some say that plan would lead to needless extra work. Many investors, however, say it would help provide transparency they have long sought.
The fight over the proposed rules has been heating up.
“It is a war now,” said Lynn Turner, a former SEC chief accountant and member of the PCAOB’s investor-advisory group. “It’s no longer a battle.”
An auditor by training, Ho says the accounting profession has room for improvement, but she opposes requirements that she says don’t boost the quality of audits. Her fellow board members tend to favor tighter requirements than she does.
Teenage protester
Born in Macau to high-school teachers, Ho traces her willingness to speak out to the 11th grade, when she participated in a student-led demonstration in Macau supporting the 1989 Tiananmen Square protests. She took a break from studying for finals to join throngs of protesters in showing solidarity with college students over Beijing’s violent crackdown on pro-democracy protests.
Ho is divorced and lives in the Washington, D.C., area with her 12-year-old daughter and her mother.
Ho moved to the U.S. to attend Edinboro University in rural Pennsylvania. She graduated in 1993 with an accounting degree and started working full time as an auditor.
At first, she didn’t like auditing because no one likes being audited. “When you show up, people always ask, ‘How long are you going to be here?’ ” she said.
Ho worked in information-technology auditing at Capital One bank and other companies before joining Deloitte, where she was a senior manager. Ho audited public companies including Fannie Mae, Advance Auto Parts and Dominion Energy, along with the World Bank and privately held businesses, she said.
She held several roles at the U.S. Treasury Department from 2009 to 2017, including deputy assistant secretary for accounting policy and financial transparency, and led the creation of a massive data set of governmentwide spending data across more than 100 agencies as mandated by a 2014 law. To complete that implementation, she faced resistance from several agencies but persuaded them to participate, a supervisor said.
“The strength that I see in her bluntness and leadership was forged in all the hard work that she did,” said Hudson Hollister, chief executive of regulatory-technology provider HData, of which Ho is an investor. As counsel to the House Oversight Committee, Hollister helped draft the 2014 law.
After several private-sector jobs, including controller and interim finance chief at University of Maryland, College Park, Ho returned to the regulatory world when the SEC appointed her to the PCAOB in 2021.
“I started to realize my role is no longer making things happen or running programs,” Ho said. “I have a vote, I have a voice.”
‘It’s definitely lonely’
Ho cast dissenting votes against two proposals and one rule over the past year. The moves, adopted despite her opposition, sought to further involve auditors in the detection and prevention of fraud, require more details on audit fees and cybersecurity risks as well as bolster the controls that guide how audit firms perform their audits, among other measures.
With one exception, no board members have joined Ho in her dissents to date.
“It’s definitely lonely,” Ho said. “And it’s not easy to be in the minority.”
Ho said she has a good relationship with fellow board members, with whom she has lunch meetings weekly.
She once lamented the board’s “apparent zeal” in imposing new burdens on firms, but she isn’t opposed to all rule-tightening. She said the existing rule on detecting illegal acts really needed some strengthening in terms of audit procedures, but argued that a proposal last year went too far.
Despite her dissents, Ho has voted with the rest of the board more often than not, supporting 13 new proposals or final rules and opposing three.
Chair Erica Williams said she respects Ho’s perspective. “Thoughtful debate leads to better policy,” she said.
‘Not my motive’
Auditors say they agree with many of Ho’s concerns, and like that she’s a champion for small firms. She doesn’t take their side on every issue, though.
Companies, which help fund the PCAOB budget, generally view Ho as an articulate advocate for balanced regulation, said Tom Quaadman, executive vice president of the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness.
Many investors say Ho doesn’t appear to have their interests in mind, because she often criticizes potential rules for which they’ve rallied.
Ho said she makes significant efforts to meet with investors, along with an array of auditors, companies and academics, and learn about their perspectives.
Some PCAOB observers see Ho as a potential candidate for chair someday, especially if Donald Trump wins the coming presidential election, which could trigger a change in SEC leadership.
To be a viable candidate, Ho would need to present more affirmative ideas to demonstrate an ability to lead the board, said Robert Jackson Jr., a former Democratic SEC commissioner.
Ho said the chairmanship isn’t something she thinks about. “I generally don’t have any political agenda to do anything like that,” she said. “That’s not my motive.”
She added: “I really just want to make sure that we innovate, improve and solve problems and that’s kind of my principle.”
Write to Mark Maurer at [email protected]
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