The Securities and Exchange Commission is already making plans in the event that the massive tax bill now moving through Congress ends up shifting the Public Company Accounting Oversight Board’s duties to the SEC.
In late May, the House passed far-reaching tax and spending legislation that included a provision transferring the PCAOB’s responsibilities to the SEC. The so-called One Big Beautiful Bill is now in the hands of the Senate, where much of it is likely to pass. However, it’s unclear whether there will be changes in the PCAOB provision, which has not been attracting as much attention as the tax and Medicaid provisions. Nevertheless, the SEC is preparing in case it inherits the PCAOB’s work.
“I guess as an initial matter, certainly, we are aware of the proposed legislation that is both in the House and the Senate as part of the budget reconciliation bill,” said SEC acting chief accountant Ryan Wolfe during Financial Executives International’s SEC and Financial Reporting Conference at the University of Southern California’s Leventhal School of Accounting. “I think from the staff perspective, where we’re assisting the Commission, it’s important that we are thinking about these issues, are monitoring and are prepared as the potential for these bills to move forward would result in the Commission having new statutory responsibilities. Specifically with respect to standard-setting and inspections, the enforcement authorities would also transfer, but we already have shared jurisdiction with respect to those activities.”
He noted that the SEC has been hearing a great deal of feedback about it across the spectrum.
“I would observe that one thing that I hear, I don’t want to say universally, but quite consistently, is the importance or the overall ecosystem of the three major programs that the PCAOB engages in, being standard-setting for auditors, inspections of auditors to evaluate the compliance with those standards, and similarly, the enforcement function,” said Wolfe. “And so I think that these are incredibly important objectives that will continue regardless, which is just to say, without providing any significant details, that we’re aware of it and we are working on those issues.”
On the other hand, the SEC’s Office of Chief Accountant is prepared in case the provision gets dropped from the final bill.
“But in the event that that would not go forward, the OCA’s assistance with the Commission and the oversight of the PCAOB will continue regardless,” said Wolfe.
He also pointed to the importance of continuing standards such as the PCAOB’s recent quality control standard, QC 1000, which takes effect at the end of the year. “QC 1000 is a big project,” he said. “I know that firms are working really hard. The PCAOB is committed to engaging with those firms to work through implementation issues. I would ask any auditors watching to continue that effort and raise those issues. We as OCA staff are also willing to engage on those issues and hear what’s working and what maybe can be addressed throughout the process.”
Panel moderator Mark Kronforst, a partner at Ernst & Young, pointed out that SEC chair Paul Atkins said during a recent congressional hearing that despite a recent 15% reduction in staff at the SEC, there would still be room in the budget for the PCAOB under the legislation.
Another SEC official also acknowledged the recent reduction in the staff during a later panel discussion.
“Certainly, there has been a reduction in the federal workforce and the Commission, the SEC, has been no exception to that,” said Gaurav Hiranandani, acting deputy chief accountants at the SEC. “Many of the talented staff at the Commission have decided to retire or have sought opportunities outside of the commission. Within OCA, we have also seen some talent depart, some longstanding staff.” He noted that some of the speakers at last year’s conference are among those who left.
Financial Accounting Standards Board chair Richard Jones also spoke at the conference and discussed the progress that FASB has been making on its standard-setting.
“A couple years ago, we comprehensively reset our agenda,” he said. “We did robust stakeholder output to really ask an open-ended question of what should be the FASB’s priority, and what you’ve seen over the last couple of years is us executing on that revised agenda. If you pull up our technical agenda today, you’ll see there are 12 projects on our technical agenda. Of those 12 projects, five of those have been voted out by our board to proceed to final standards. Five of those are in redeliberations, meaning that we’ve already issued an exposure draft, we’ve gotten great input from our stakeholders, and our board will be redeliberating to decide what direction to go forward on those standards. We voted to move forward with an exposure draft on another standard, so that’s 11 of the 12. If you follow those through, and you follow a plan of execution on those standards, it’s very reasonable that we could complete substantially all the projects on our agenda at or about the end of this year.”
Last week, PCAOB chair Erica Williams expressed her support for keeping the PCAOB separate. “Over the past two decades, the PCAOB has secured dozens of bilateral cooperative agreements with other financial regulators across the globe, including in China, that facilitate our access not only to inspect firms outside the U.S. but also to investigate, and take testimony – leaving the PCAOB uniquely positioned to conduct enforcement of audit firms around the world like no other U.S. regulator can,” she said in a speech at the 2025 ALI-CLE Accountants’ Liability Conference in Washington, D.C. “This is just one of the many reasons why I am deeply troubled by legislation being considered in Congress to eliminate the PCAOB as we know it and attempt to fold its responsibilities into the SEC. The SEC was my professional home for 11 years. I have deep admiration and respect for the incredible professional staff there. They are excellent at what they do. It is different from what we do here at the PCAOB. 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. This policy idea is not new. It has been around since the PCAOB was first created. In the more than 20 years since, the PCAOB, led by its expert staff, has made invaluable contributions to the safety and security of U.S. capital markets. Investors are better protected because of the PCAOB. Audit quality has improved because of the PCAOB.”
