Republican lawmakers in the US have proposed shutting down the Public Company Accounting Oversight Board (PCAOB) as part of President Donald Trump's deregulatory agenda, according to the Financial Times.
A draft bill released by the House Committee on Financial Services proposes folding the PCAOB's responsibilities into the Securities and Exchange Commission (SEC) and scrapping the levy that funds it. Created after the collapse of Enron, the PCAOB oversees audit standards and firm inspections.
"Oversight models may evolve, but what should not change is the profession's accountability to the capital markets," said Julie Bell Lindsay, CEO of the Center for Audit Quality. Sandy Peters of the CFA Institute warned that eliminating the PCAOB would risk undermining US capital markets, which require a "strong, apolitical and independent audit regulator."
PCAOB employees could transfer to the SEC but would likely face pay cuts. The draft bill also cuts unallocated funds from a $1 billion green retrofitting program and slashes the Consumer Financial Protection Bureau's budget. The proposal faces procedural hurdles and internal Republican negotiations, which will ultimately determine whether it will be included in an upcoming reconciliation bill.
In 2023, Starling published "Renal Failure: A Crisis in Audit Culture?," a Deeper Dive report into global concerns surrounding audit quality and professional conduct. Therein, we discuss the efforts of regulators, including the PCAOB, to reform audit quality and governance.
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