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Republican lawmakers plan to shut down the US audit regulator, which was founded in the wake of the Enron scandal more than two decades ago, as part of a reform package designed to deliver Donald Trump’s deregulatory agenda.
The proposal to scrap the Public Company Accounting Oversight Board was published late on Friday by the leadership of the House Committee on Financial Services, for inclusion in the giant tax and spending bill being considered by Congress.
Under the draft legislation, a levy on listed companies and broker-dealers that funds the PCAOB would be scrapped and the organisation’s responsibilities would be folded into the Securities and Exchange Commission.
The PCAOB was set up to oversee audit standards and conduct regular inspections of firms that audit US public companies, after the collapse of Enron in 2001 exposed shortcomings in the previous self-regulatory regime.
Accounting firms have chafed against the activist leadership of chair Erica Williams, under whom the agency imposed tough new standards and extracted record fines in enforcement actions.
Any effort to scrap the agency will probably be met with resistance from Democrats and may not receive the full endorsement of audit firms, either.
The Center for Audit Quality, which represents the largest firms, has called for the agency to be more responsive to accounting firms, but has stopped short of calling for its elimination.
While employees of the PCAOB would be given the chance to transfer their roles to the SEC, they would have to take pay cuts to do so. Critics said that such a move would substantially disrupt the audit-firm inspection regime.