As reported in various news outlets, President Trump’s 2021 budget includes a proposal that would consolidate the PCAOB into the SEC. Consider me a skeptic as to the likelihood of this actually happening, but then again it’s up to Congress so we’ll see. A blog from Baker Botts discusses some of what this might mean for issuers and auditors if it really happens. Here are some considerations:
– Would the monitoring of public accounting firms be carried out in the same manner as it has been under the PCAOB? Would the SEC replicate the scope, magnitude and rigor of the PCAOB’s regulatory activities?
– The proposed budget raises the possibility that funding will be reduced, does this mean auditor oversight activities would be reduced under the SEC—or would consolidation truly save millions without a reduction in oversight activities?
– Would the SEC assume the PCAOB’s standard-setting function?
– Would audit firms and auditors lose confidentiality protections, which were explicitly required when Congress created the PCAOB, that aren’t necessarily available for charges brought by the SEC?
As alluded to in the blog, perhaps even if the consolidation doesn’t happen, there may be other changes in store for the PCAOB.
-Lynn Jokela, TheCorporateCounsel.net March 6, 2020
