Who Audits the Auditors? U.S. Shake-Up Could Undermine Global Oversight
What happens when the world's largest capital market proposes dismantling its independent audit watchdog?
That’s exactly what’s happening in the U.S., where a controversial draft bill could see the Public Company Accounting Oversight Board (PCAOB) shut down — with its critical audit inspection and enforcement duties shifted to the Securities and Exchange Commission (SEC).
At first glance, it might seem like a bureaucratic reshuffle. But PCAOB Chair Erica Williams is calling it what it really is: a serious threat to investor confidence and audit quality — and a potential global setback.
⚠️ “This is not a cut-and-paste job”
Williams, speaking to the PCAOB’s Investor Advisory Group this week, didn’t mince words. Dismantling the PCAOB, she warned, would create years of disruption, erasing decades of hard-earned credibility, specialist audit knowledge, and cross-border agreements.
Let’s not forget: the PCAOB was born out of the early 2000s scandals (remember Enron and WorldCom?) that shook the profession. Its work today includes global inspections in over 50 jurisdictions, access agreements with countries like China, and a team of auditors with 22+ years of experience on average.
Replacing that with an already stretched regulator like the SEC? Risky, slow, and possibly irreversible.
🌍 Why SA Accountants Should Care
South African firms — especially those tied into global networks — should be watching this debate closely. Here’s why:
Audit independence matters. Once it's lost, rebuilding trust is tough.
PCAOB inspections impact multinational audits, including those involving JSE-listed entities.
Investor confidence is global — U.S. changes ripple into every capital market, including ours.
Regulators like IRBA draw lessons from global frameworks. A rollback in the U.S. could shift standards worldwide.
📌 Closer to home: As South Africa strengthens audit oversight through IRBA reforms and explores mandatory audit firm rotation, this U.S. proposal is a stark reminder of what’s at stake. A weakened global oversight ecosystem could slow down momentum for local reforms — or worse, provide cover for complacency.
What if a similar move were proposed in South Africa — such as dissolving IRBA and shifting its functions to the FSCA or National Treasury? We can agree that this could weaken independent audit oversight, blur regulatory accountability, and possibly erode public trust in financial reporting (even further) at a time when investor confidence is already fragile.
In Erica Williams’ words:
“You can’t just transfer 20 years of regulatory infrastructure and expect no consequences. We hold global firms accountable. Scrapping this opens the door to audit avoidance — again.”
Source: Accounting Today
