Draft legislation being considered by the House Financial Services Committee, which proposes to abolish the Public Company Accounting Oversight Board and fold its responsibilities into the Securities and Exchange Commission, would put investors at a “significant risk at a time when markets are already volatile,” the chair of the PCAOB said during a speech on April 29.
“I am deeply troubled by draft legislation being considered by the House Financial Services Committee that proposes to eliminate the PCAOB as we know it,” Erica Williams said during the PCAOB Investor Advisory Group meeting on Tuesday.
The measure would be included in President Donald Trump’s multitrillion-dollar tax-cut package, which congressional Republicans and the Trump administration want passed by July 4. The administration has made it a top initiative to reduce regulation and cut costs, which is why the PCAOB is in the House panel’s crosshairs.
The legislation would be added to a reconciliation package, which allows for expedited consideration for tax and spending measures, requiring only majority support in both chambers of Congress.
Under the draft legislation, accounting support fees from SEC-registered public companies and broker-dealers that are used to fund the PCAOB would end, and those fees would be transferred to the Treasury General Fund. In addition, all PCAOB responsibilities and possibly some of its staff would be moved under the SEC.
Williams, a lawyer who is in her second term as chair of the U.S. audit regulator, previously worked at the SEC for 11 years serving in various roles, including as deputy chief of staff under chair Mary Jo White. Williams said Tuesday she has “deep admiration and respect for the incredible professional staff [at the SEC]. They are excellent at what they do.”
But, she added, the SEC “is different from what we do here at the PCAOB.”
The following is an excerpt from Williams’ speech in which she talks about why eliminating the PCAOB would be a mistake:
The unique experience and expertise built up by the PCAOB over decades cannot simply be cut and pasted without significant risk to investors at a time when markets are already volatile.
The disruption to inspections alone while a new program gets up and running could last years.
We do not have to guess what could happen in the interim when no one is looking. We already know from the accounting scandals of the early 2000s, from Enron and WorldCom, that brought us to where we are today: investors lost billions of dollars in savings, workers lost their jobs and their retirement, and trust in our markets eroded.It takes a minimum of 480 experienced staff to conduct the inspections required by the Sarbanes-Oxley Act, in addition to many others who are essential to supporting their work, and hiring them would come at considerable cost to the SEC—that is assuming it is possible to hire them at all. There is currently an industry-wide shortage of accounting and audit talent, and our team members are some of the most respected and employable members of the profession.
PCAOB inspections staff average 22 years of experience, including a decade in public accounting before ever joining the PCAOB.
They have experience in more than 30 different industries, from banking to energy, and expertise across 40 different subject matters, from revenue recognition to derivatives and technology. They speak 33 different languages.
That language expertise is necessary because the PCAOB regularly conducts inspections in more than 50 jurisdictions around the world. Local laws in many of those countries require cooperative agreements that the PCAOB has secured over years of negotiation to ensure we have the access necessary to inspect and investigate completely.
None of the agreements contain provisions that would allow the PCAOB’s privileges and responsibilities under the agreements to be transferred to the SEC. They would have to be renegotiated before inspections could be conducted, which could take years.
Of course, this includes China, where for the first time in history, the PCAOB has been successfully inspecting and investigating completely, holding Chinese firms accountable and bringing historic enforcement cases.
The PCAOB secured every concession we demanded from China in the Statement of Protocol that facilitates our access to inspect and investigate completely.
We have their feet to the fire.
Scrapping that agreement and starting over gives China the opportunity to exploit the uncertainty in order to avoid scrutiny of its audit work once again, to the detriment of investors.
These are just some examples of the challenges posed by eliminating the PCAOB.
Of course, our inspections program is strengthened by tough enforcement carried out by our expert investigators. And without the talented team working to keep PCAOB standards up to date, there is nothing to inspect against.
Every member of the PCAOB team plays a critical role in executing our mission of protecting investors on U.S. markets. And they are irreplaceable.
Project 2025, a conservative blueprint released last year on how the federal government could be reshaped under a second Trump term in the White House, called for the PCAOB’s regulatory functions to be merged into the SEC.
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Sam Cordovano May 1 2025 at 8:15 pm
I have direct experience with this group. The enforcement division lawyers may not always have extensive knowledge of accounting or auditing. The goal of the lawyers in the enforcement division is often career advancement into private industry. Additionally, PCAOB directors receive substantial compensation. The PCAOB sometimes declares an audit a failure even if no investors have expressed concerns about the company's financials and no legal action has been taken against the accountants. Accountants facing proceedings from the PCAOB have the right to a hearing before an Administrative Law Judge (ALJ). However, PCAOB ALJs are employees of the PCAOB, not government employees, and they determine the outcome and punishment in these cases. This structure means that accountants rarely prevail in administrative hearings. The PCAOB has issued a guide to administrative hearings, which states that it “was prepared by members of the PCAOB's staff and is not a statement by the PCAOB or by any of the members of the PCAOB's Board (the Board).” A reconstituted federal audit regulator should focus on audits that have been declared failures by a jury. They should investigate only bonafide audit failures. Sam Cordovano