SEC Commissioner Advocates Comprehensive Review of PCAOB’s Effectiveness

WASHINGTON, December 9, 2024 – In an important speech at the annual ​conference on financial reporting and accounting at the American Institute of Public Affairs, ​Mark ​T. Uyeda called for a comprehensive evaluation of the ​Public ​Enterprise Accounting Supervision Board (PCAOB) ​to ​determine ​its success in achieving ​the goals ​set by Congress more than two decades ago.

Commissioner Uyeda stressed the need for a comprehensive assessment, indicating ​that “all options should be on the table”, suggesting that ​possible reforms could include the inclusion of CPOB in the Securities and Change Committee (SEC) or other significant structural changes.

Historical context ​and mandate of the ​PCAOB

The PCAOB was established in 2002 under the Sarbanes-Oxley Act in response to major corporate scandals, with the mission of ​supervising audits of public enterprises in ​order to protect ​investors and ensure the ​preparation of informative, accurate and independent audit reports. Over the years, the Board has applied a number of standards to improve the ​quality and accountability ​of ​audits.

Calls for evaluation

Commissioner Uyeda’s comments reflect the growing sentiment of some actors that it is time to review the ​structure and ​effectiveness of ​the CBAOB. This perspective ​is consistent with previous statements, emphasizing the ​importance of assessing regulators to ensure that they are responsive to changing ​financial landscape and continue to serve the public interest effectively.

Potential structural changes

The suggestion ​to double the ​PCAOB in ​the SEC represents a significant ​change in ​the current ​independent structure. Such a measure would centralize regulatory oversight, but also raises questions about maintaining the Board’s independence and the specialized approach to auditing ​standards.

Sector reactions

Reactions within the accounting and hearing profession are mixed. Some professionals advocate maintaining the independence of the PCAOB to ensure specific monitoring of audit practices, while others ​see potential benefits in streamlining the regulatory functions of the SEC in order to increase ​the efficiency and consistency ​of ​financial regulation.

Next steps

Commissioner ​Uyeda’s call for a “deep immersion” in the performance of the PCAOB should initiate ​discussions among decision makers, industry professionals and other stakeholders. The results ​of these discussions could lead to significant changes in the regulatory framework governing audits of public ​enterprises ​in the United States.

As the financial reporting environment continues to evolve, these assessments are crucial to ​ensuring that regulators such as the BBCP effectively fulfill ​their ​mandate to protect investors and maintain the integrity ​of ​financial markets.