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PCAOB Awaits Congress Vote before Proposing Audit Inspection Program

December 13, 2018

Before it proposes a permanent inspection program for auditors of brokerage firms, the Public Company Accounting Oversight Board (“PCAOB”) wants Congress to pass a bill that curbs broker-dealers’ audit requirements. Speaking earlier this month at the PCAOB’s Investor Advisory Group meeting, William Duhnke stated that the board is waiting for Congress to vote on the Small Business Audit Correction Act this year to allow for legislative movement. If the bill is not passed by the end of the current session, the PCAOB chairman said the board will prioritize its program early next year to address what the inspection program will be and how it is structured.

The Small Business Audit Correction Act exempts certain small broker-dealers from the requirement for an independent audit. Passed in September by the House Financial Services Committee, the measure would amend the Sarbanes-Oxley Act to exempt privately held broker-dealers who do not manage client funds from using a PCAOB-registered audit firm for their yearly reporting requirements. Brokerage firms must have less than 150 brokers to get the exemption.

Securities and Exchange Commission chairman Jay Clayton supports the bill, affirming his agency oversees the PCAOB and has the authority to approve all board decisions before they are effective.