French audit regulator cautions against dismantling US PCAOB

The French audit regulator has expressed its concerns regarding the potential elimination of the US Public Company Accounting Oversight Board (PCAOB), cautioning about the potential harmful repercussions. This statement comes amidst ongoing discussions among US lawmakers regarding a legislative proposal that could lead to the dismantling of the PCAOB and a transfer of its responsibilities to the Securities and Exchange Commission (SEC).

The PCAOB, which was established in the aftermath of several accounting scandals in 2002, serves a critical function in overseeing audits conducted by public companies. Florence Peybernes, the president of France’s High Authority of Auditing (H2A), has emphasized the importance of maintaining coordination and collaboration between H2A and its American counterpart, expressing concerns about potential disruptions if the proposed transitions take place.

Similar worries have been echoed by audit regulators in Germany, highlighting the complexity of the situation. The PCAOB has existing agreements with regulators in the European Union, which would necessitate renegotiation if its responsibilities were to be transferred to the SEC. This process of renegotiation could potentially lead to significant challenges and uncertainties during the transitional period, as noted by Peybernes.

In addition to these concerns, PCAOB Chair Erica Williams has emphasized the necessity of preserving audit oversight for the benefit of investors. In a letter addressed to Congresswoman Maxine Waters, Williams underscored the critical role auditors play in safeguarding the interests of millions of Americans who are invested in the stock market through retirement accounts and pensions. Williams stressed the importance of auditors conducting their duties with meticulous care and attention to ensure the integrity of financial reporting.

On the other hand, SEC Chairman Paul Atkins has indicated the SEC’s willingness to assume the functions of the PCAOB, requesting additional funding to support any new responsibilities that may arise from this transition. Despite potential cost concerns and criticisms from some Republicans, advocates emphasize the positive impact of the PCAOB in enhancing financial reporting standards and ensuring transparency in the market.

Overall, the potential dismantling of the PCAOB and the transfer of its responsibilities to the SEC could have far-reaching implications for audit oversight and regulatory collaboration between the US and its international counterparts. As policymakers navigate these complex issues, it is essential to consider the broader implications and consequences of such changes on the stability and efficacy of financial oversight mechanisms on a global scale.