PCAOB Proposes Rule to Create Framework for HFCAA Determinations
The Public Company Accounting Oversight Board (PCAOB) today issued for public comment a proposed rule related to the PCAOB’s responsibilities under the Holding Foreign Companies Accountable Act (HFCAA). The Board requests public comment on the proposal by July 12, 2021.
“Cooperation between the PCAOB and our international counterparts is vital to facilitating meaningful audit oversight and to strengthening investor protection," said PCAOB Chairman William D. Duhnke III. "This rule will enable the PCAOB to fulfill its responsibilities under the Holding Foreign Companies Accountable Act, a law passed with extraordinary bipartisan support.”
Duhnke added: “The rule addresses situations where overseas authorities have denied the PCAOB the access it needs to conduct its mandated oversight activities.”
The proposed 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 proposed rule would establish:
- 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 can modify or vacate its determinations.
In addition to a section addressing background information and the reason for the proposed rule, the proposing release includes a discussion of the proposed rule and a section on economic considerations. Questions upon which the Board seeks public comment are included throughout the document.
The public can learn more about submitting comments on proposed PCAOB rules at the Rulemaking Docket page. For more information regarding the PCAOB’s cross-border cooperation and engagement, visit 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.
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