PCAOB Adopts Rule to Create Framework for HFCAA Determinations

Washington, Sep. 22, 2021

The Public Company Accounting Oversight Board (PCAOB) adopted a new rule related to the PCAOB’s responsibilities under the Holding Foreign Companies Accountable Act (HFCAA).

Proposed in May 2021, the rule provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the Board is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. The rule establishes:

  • The manner of the Board’s determinations;
  • The factors the Board will evaluate and the documents and information it will consider when assessing whether a determination is warranted;
  • The form, public availability, effective date, and duration of such determinations; and
  • The process by which the Board will reaffirm, modify, or vacate its determinations.

“The rule we adopt today exemplifies our strong and long-held belief that investors benefit from robust international regulatory cooperation and a level playing field for audit oversight in U.S. capital markets,” said PCAOB Acting Chairperson Duane M. DesParte. “This rule will promote transparency and consistency in the processes that support fulfillment of the Board’s responsibilities under the HFCAA.”

The new rule is subject to approval by the U.S. Securities and Exchange Commission (SEC). If approved by the SEC, the rule will immediately become effective, and the PCAOB will promptly make any determinations under the rule that are appropriate.

For further background and relevant documents — including public comments received on the proposing release — visit  Rulemaking Docket No. 048. More information regarding the PCAOB’s cross-border cooperation and engagement can be found at our International page.


About the PCAOB

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers, including compliance reports filed pursuant to federal securities laws.


PCAOB Office of Communications and Engagement
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