House Committee Pushes Major Shake-Up in Audit Oversight Structure

In a landmark move poised to reshape the landscape of corporate auditing in the United States, the House Financial Services Committee has voted in favor of legislation that would eliminate the Public Company Accounting Oversight Board (PCAOB), transferring its authority directly to the Securities and Exchange Commission (SEC).

The decision marks a dramatic shift in the way public company audits are regulated, sparking intense debate among financial experts, corporate leaders, and lawmakers.

Rep. Maxine Waters (D-CA) serves as the top Democrat on the House Financial Services Committee.

A Shift in Oversight

The PCAOB, established in 2002 as part of the Sarbanes-Oxley Act in the wake of corporate scandals like Enron and WorldCom, has been the primary watchdog for auditing firms that serve publicly traded companies. The proposed legislation would consolidate its responsibilities—such as audit inspections, standard-setting, and enforcement—under the SEC’s existing regulatory framework.

Proponents of the move argue it would enhance efficiency and reduce bureaucratic duplication. “This is about modernizing oversight and ensuring the SEC has clear, unified authority to safeguard financial markets,” said one committee member supporting the bill.

Concerns Over Independence and Transparency

However, critics warn that dismantling the PCAOB could weaken the independence of audit oversight and expose the process to political interference. “The PCAOB was created to act as a buffer between political power and the technical, often sensitive, job of audit regulation,” said a former board member. “Removing that layer opens the door to greater risk of conflicts of interest and diminished investor protection.”

Investor advocacy groups and audit industry professionals have also expressed unease, noting that the PCAOB has played a key role in improving audit quality and transparency over the past two decades.

What Happens Next

The bill now moves to the full House for consideration. If passed, it would represent the most significant structural change to U.S. audit regulation in more than 20 years. The SEC has not yet commented officially on the potential absorption of PCAOB duties, but insiders suggest discussions are already underway regarding how such a transition could be managed without disrupting market confidence.

Analysts say the outcome could have far-reaching implications—not just for auditors, but for public companies, investors, and anyone who relies on the integrity of corporate financial statements.