A clause in the House tax bill passed last week carries significant implications for audit oversight: the dissolution of the Public Company Accounting Oversight Board (PCAOB) and the transfer of its duties to the SEC. According to a report by Accounting Today, the move would unwind two decades of regulatory structure established under the Sarbanes-Oxley Act, which created the PCAOB in response to corporate scandals like Enron and WorldCom.  

The legislation gives the SEC one year to take over the PCAOB’s core functions, including enforcement, standard-setting, and inspections. At a recent conference, SEC Chair Paul Atkins said the commission could manage the transition if provided with the necessary funding and staffing. But PCAOB Chair Erica Williams has strongly opposed the proposal, warning of delays in enforcement, risks to investor protection, and the potential collapse of long-negotiated international inspection agreements. 

“This policy idea is not new,” Williams said, “but the markets we operate in today are more complex, not less.” 

While acknowledging the bill’s momentum, the AICPA has not taken a formal position. The organization ceded public company audit standard-setting to the PCAOB in 2003. “We stand ready to assist policymakers,” AICPA President and CEO Mark Koziel said, emphasizing the need for regulatory continuity and effective oversight.  

The bill is now headed to the Senate, where lawmakers are expected to continue debate on the structure of audit regulation and the future of the PCAOB’s role in protecting U.S. capital markets.