White House proposes folding PCAOB into SEC by 2022
The White House’s latest budget blueprint proposes consolidating the functions and responsibilities of the Public Company Accounting Oversight Board into the Securities and Exchange Commission starting in 2022.
The move would save a projected $57 million that year, and up to $580 million by 2030, but the impact on audit firms and investor protection couldn’t be calculated. The White House budget blueprint is traditionally rejected by Congress and the proposal isn’t expected to get very far this year, especially with Democrats in control of the House. However, it could play a part in future budget negotiations, especially after the November elections, when control of the White House and/or Congress could change.
The PCAOB was established by the Sarbanes-Oxley Act of 2002, which Congress passed in the wake of high-profile accounting scandals involving companies like Enron, WorldCom and Tyco. The PCAOB inspects auditing firms, sets auditing standards and oversees efforts to ensure higher audit quality, and it is overseen by the SEC.
The budget request outlines some of the reasons why the PCAOB could be consolidated into the SEC.
“SEC is already charged with investigating federal securities law violations and has the authority to impose disciplinary action, including for public accounting firms that are also overseen by PCAOB," according to the document. "Consolidating these functions within SEC will reduce regulatory ambiguity and duplicative statutory authorities. SEC is also subject to discretionary appropriations, which ensures oversight and constraint over the fees assessed on market participants.”
The PCAOB did not immediately respond to a request for comment.
Rep. Bill Huizenga, R-Michigan, told The Wall Street Journal that he had encouraged the Trump administration to consider the proposal. “This is a conversation we need to have,” he told the WSJ. “And it makes sense to me as we are trying to streamline and make government more efficient.” However, he admitted the proposal stands little chance of being passed by Congress, adding,“By law, the White House proposes a budget. By tradition, Congress ignores it. But it is worth having the conversation.”