The US Public Company Accounting Oversight Board (PCAOB) has withdrawn two proposed disclosure rules after consultations with the Securities and Exchange Commission (SEC).
The rules, which faced opposition from the accounting profession, were aimed at firm reporting and engagement metrics, with the intention of enhancing transparency and accountability within the sector.
Published for comment in the Federal Register on 5 December 2024 and 11 December 2024 respectively, the proposed rules on firm reporting and firm and engagement metrics were met with resistance from industry professionals.
The proposals were retracted, pending SEC approval before any PCAOB rules can be implemented.
Despite this, both items remain on the board’s rule-writing agenda.
The current move by the PCAOB is interpreted as an effort to align with the preferences of the SEC’s new leadership.
Auditors had previously urged the SEC to return the projects to the PCAOB for further examination.
They argued that the board had not sufficiently justified the need for investors and audit committees to undertake additional auditor reporting.
The two proposals, approved by the board in November 2024, would have mandated major audit firms to disclose financial information to their regulator and required detailed reporting on partner oversight and the training of staff involved in public company audits.
AICPA Public Accounting CEO Susan S. Coffey said in a Facebook post that: “The American Institute of CPAs (AICPA) applauds the decision by the Public Company Accounting Oversight Board (PCAOB) to withdraw proposed rules on audit firm reporting and audit engagement metrics.
“AICPA publicly expressed its concerns in 2024 that the proposed requirements would have harmed the US capital markets and the investing public. Among our concerns was the potential unintended consequence of the rules prompting small and midsized audit firms to stop performing public company audits, impacting companies that depend on those audit firms as they seek access to US capital markets.”
