On May 19, President Trump issued Executive Order on Regulatory Relief to Support Economic Recovery, directing federal agencies to address coronavirus-related economic emergency “by rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery, consistent with applicable law and with protection of the public health and safety, with national and homeland security, and with budgetary priorities and operational feasibility.”
Trump announced the executive order at a cabinet meeting at the White House, telling Transportation Secretary Elaine Chao the order “gives you tremendous power to cut regulation.”
“And we want to leave it that way,” he said. “In some cases we won’t be able to but in other cases we will.”
Back in February, we learned that the Trump administration’s fiscal 2021 budget proposal included intentions to fold the PCAOB into the SEC by 2022 in order to “reduce regulatory ambiguity,” which the administration estimates would save $580 million over nine years. The PCAOB is funded primarily through an accounting support fee collected from public companies and other issuers, as well as brokers and dealers registered with the SEC.
We all know how Trump feels about the regulatory environment, so let’s all spare ourselves a collective migraine and not get into those particular weeds here.
That said, now would be a good time to revisit Jim Peterson’s April 1 post ‘So What If the SEC Swallowed the PCAOB?‘
The PCAOB lacked credibility from its birth—well before the current push for its demise:
- Under its founding legislation, its inspections take place in the dark, with results only emerging so old as to be stale.
- It remains conspicuously excluded from operations in China, despite continuous over-selling of progress just around the corner.
- It dealt at a glacial pace with such small-bore projects as mandatory auditor rotation and the naming of lead audit partners.
- Even its recent catch-up convergence with the global standards on extended audit reporting of ‘‘critical audit matters’’ trails experiences in other countries that have yet to demonstrate serious investor attention or value.
Currently, the departure of essentially all senior staff has hollowed out its core of experience and expertise, while the poverty of its plans and initiatives was reflected in a ‘‘strategic plan’’ of vacuous cliches.
Despite its long-standing 1997 Boston Celtics-like performance, even PCAOB critics have concerns about folding the agency into the SEC. Still others are concerned about “deregulatory overkill” and any potential erosion of independence should the PCAOB get taken out in the back of the barn and put down like a rabid dog.
Last week, the PCAOB announced it ended its self-imposed 45-day relaxed inspection schedule and would resume inspections, albeit virtually. Travel and in-person visits remain suspended.
So does this latest executive order mean the PCAOB has to sweat their own existence that much more? Like pretty much everything else these days, we just don’t know. In the meantime, it’s business as usual at the PCAOB. Well, except for that whole Rona thing, everyone working from home, and a travel ban for staff, but other than that, yeah, business as normal.