In November, the PCAOB approved new rules that would require firms to report various metrics: Partner and Manager Involvement, Workload, Training Hours for Audit Personnel, Experience of Audit Personnel, Industry Experience, Retention of Audit Personnel (firm-level only), Allocation of Audit Hours, and Restatement History (firm-level only). As anyone familiar with the inner workings of public accounting could have predicted, the firms were not thrilled with the idea and said as much in public comments. See also:
The rules had to be approved by the SEC before made official, as all new Board-approved rules must be, however we didn’t even get to that part as the PCAOB quietly withdrew the proposed rules a month before the SEC was due to approve or disapprove said rules.
No reason was given in the below notice.
Guess it’s back to busting European auditors for sharing answers on internal training for the PCAOB goon squad while Part I.A. deficiencies are, in Chair Erica Williams’ own words, “unacceptable.”
I say good. I opposed the rules as a waste of time.
The PCAOB is definitely on the clock. Elon is coming. Making it easier for corporations to provide fraudulent financial information is basically part of the core mission of DOGE.
Here’s the thing: if the PCAOB folds into the SEC, nothing changes beyond oversight and governance. They’re still doing the same thing and the SEC will be the ones enforcing new rules. Who says the SEC wouldn’t have passes this? In practice, very little will change if the PCAOB is absorbed by the SEC.
This is correct. The Board members are appointed by the SEC. They have 5 year term limits and are not supposed to be politically motivated roles. There was an a-typical convergence of term-limits and resignations in 2017 that resulted in the entire Board turning over. This was characterized as a political move* and set the precedent that the entire Board would be aligned with the political party in control. When the administration changed again in 2021, the Board got flushed once again (the 5 year term is a limit, not a guarantee). Regardless of whether they get folded into the SEC, the current Board will get wiped and we’ll see a new Board aligned with the new GOP controlled SEC. Ironically folding the PCAOB under the SEC is probably the best way to keep the PCAOB. Eventually someone is going to challenge the constitutionality of the current set-up and it’s on shaky ground at best.
*Whether it truly was is unclear
What makes you think the SEC won’t be terminated? It’s basically an organization that prevents white collar crime. Seems like a perfect target for DOGE.
The SEC brings about 800 enforcement cases a year. Some are meritorious, many are not. For example, within the last six months, the SEC brought an insider trading case against a fellow named Groom over $13,000 in profits. Absurd.
The PCAOB was created after Congress was infuriated over Enron and Worldcom, two multibillion dollar disasters. Where was the SEC on Enron and Worldcom? Look at current bank holding company accounting, a disaster in my opinion.
Look at the SEC-NYBigLaw revolving door. In my opinion SEC lawyers are more interested in their future career trajectories than the protecting the public. POGO did some good analysis in this area.
The SEC brings some good cases. It brought one against a guy named Leech within the last six months over millions which he apparently stole from his customers by “cherry-picking” trades. Could the SEC do a better job? Its had 90 years to show its colors. It should have its jurisdiction limited to enforcement actions in fraud cases.