Republicans plan to scrap US audit regulator | USAEMALL.com

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Republican lawmakers are planning 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 eliminate the independent 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 eliminate the agency is likely to meet resistance from Democrats and may not receive the full endorsement of audit firms.

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 PCAOB employees would be given the chance to transfer their roles to the SEC, they would in many cases have to take pay cuts as the organisation is not subject to government pay scales. Critics said that such a move would substantially disrupt the audit-firm inspection regime.

The proposal faces procedural hurdles. It will go to the full House Committee on Financial Services for approval in the coming days. But whether it will be included in the tax and spending bill, known as a reconciliation bill, will depend on negotiations within the Republican leadership in the House and Senate and whether it is deemed a budgetary measure.