Does the SEC oversee the Pcaob?

Oversight of the PCAOB by the SEC

The Public Company Accounting Oversight Board (PCAOB) is a non-profit corporation established by Congress to oversee the audits of public companies and SEC-registered brokers and dealers. The SEC has oversight authority over the PCAOB, including the approval of the Board’s rules, standards, and budget (PCAOB, n.d.).

Key Facts

  1. The SEC has oversight authority over the PCAOB.
  2. The PCAOB was created by Congress after the financial scandals at Enron, WorldCom, and other public companies to oversee public company auditors.
  3. The SEC can enforce federal securities laws as well as Board rules regarding public company auditors.
  4. There have been discussions and proposals to merge the PCAOB into the SEC, but these proposals have not been adopted.
  5. The SEC and the PCAOB have overlapping enforcement authority, but there is evidence of resource allocation rather than duplication of resources.
  6. The SEC focuses on cases against auditors that involve financial misconduct that the SEC is already pursuing.
  7. The PCAOB’s enforcement actions cover a wide range of misconduct, including violations of audit standards and non-compliance with Board requirements.
  8. The SEC-PCAOB relationship demonstrates the concept of regulatory personhood, where agencies with shared jurisdiction impose remedies on the same regulated industry.
  9. The SEC and the PCAOB have separate websites, and information about enforcement actions may not be efficiently coordinated between the two agencies.

The PCAOB was created in response to the financial scandals at Enron, WorldCom, and other public companies. The PCAOB’s mission is to protect investors and the public interest by overseeing the audits of public companies and SEC-registered brokers and dealers (PCAOB, n.d.).

The SEC has the authority to enforce federal securities laws as well as Board rules regarding public company auditors (Williams, 2022). There have been discussions and proposals to merge the PCAOB into the SEC, but these proposals have not been adopted (Williams, 2022).

Overlapping Enforcement Authority

The SEC and the PCAOB have overlapping enforcement authority over public company auditors. However, there is evidence of resource allocation rather than duplication of resources (Williams, 2022). The SEC focuses on cases against auditors that involve financial misconduct that the SEC is already pursuing (Williams, 2022). The PCAOB’s enforcement actions cover a wide range of misconduct, including violations of audit standards and non-compliance with Board requirements (Williams, 2022).

Regulatory Personhood

The SEC-PCAOB relationship demonstrates the concept of regulatory personhood, where agencies with shared jurisdiction impose remedies on the same regulated industry (Williams, 2022). However, the SEC and the PCAOB have separate websites, and information about enforcement actions may not be efficiently coordinated between the two agencies (Williams, 2022).

Conclusion

The SEC has oversight authority over the PCAOB. The SEC and the PCAOB have overlapping enforcement authority, but there is evidence of resource allocation rather than duplication of resources. The SEC focuses on cases against auditors that involve financial misconduct that the SEC is already pursuing. The PCAOB’s enforcement actions cover a wide range of misconduct. The SEC-PCAOB relationship demonstrates the concept of regulatory personhood, but the two agencies have separate websites, and information about enforcement actions may not be efficiently coordinated between the two agencies.

References

PCAOB. (n.d.). About the PCAOB. Retrieved from https://pcaobus.org/about

Williams, S. J. (2022, October 31). Are We Seeing Double? Regulatory Overlap Between the SEC and the PCAOB. CLS Blue Sky Blog. Retrieved from https://clsbluesky.law.columbia.edu/2022/10/31/are-we-seeing-double-regulatory-overlap-between-the-sec-and-the-pcaob/

FAQs

Does the SEC oversee the PCAOB?

Yes, the SEC has oversight authority over the PCAOB, including the approval of the Board’s rules, standards, and budget.

Why was the PCAOB created?

The PCAOB was created by Congress in response to the financial scandals at Enron, WorldCom, and other public companies. The PCAOB’s mission is to protect investors and the public interest by overseeing the audits of public companies and SEC-registered brokers and dealers.

What is the PCAOB’s role in overseeing public company audits?

The PCAOB establishes auditing standards for public companies, inspects registered public accounting firms, and investigates and disciplines accounting firms and their associated persons for violations of the Sarbanes-Oxley Act and PCAOB rules.

What is the SEC’s role in overseeing the PCAOB?

The SEC has the authority to approve the PCAOB’s rules, standards, and budget. The SEC also has the authority to investigate and discipline the PCAOB and its staff.

Is there any overlap in the SEC’s and PCAOB’s enforcement authority?

Yes, the SEC and the PCAOB have overlapping enforcement authority over public company auditors. However, there is evidence of resource allocation rather than duplication of resources. The SEC focuses on cases against auditors that involve financial misconduct that the SEC is already pursuing. The PCAOB’s enforcement actions cover a wide range of misconduct, including violations of audit standards and non-compliance with Board requirements.

What is regulatory personhood?

Regulatory personhood is a concept that describes the condition of being an individual person. In the context of the SEC and the PCAOB, regulatory personhood means that each agency has its own enforcement priorities and procedures.

How does regulatory personhood affect the SEC’s and PCAOB’s enforcement activities?

Regulatory personhood can lead to inefficiencies in the enforcement of securities laws. For example, the SEC and the PCAOB may not coordinate their enforcement actions, which can lead to duplicative investigations and enforcement actions.

What can be done to improve the coordination between the SEC and the PCAOB?

There are a number of things that can be done to improve the coordination between the SEC and the PCAOB. For example, the two agencies could enter into a memorandum of understanding that outlines their respective roles and responsibilities. The agencies could also create a joint task force to investigate and prosecute cases of financial misconduct.

Related posts: