I fully support adoption of PCAOB Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act (HFCAA), as set forth before us today.
Robust inspections and investigations of registered public accounting firms auditing U.S. public companies are core to the PCAOB’s mandate under the Sarbanes-Oxley Act. This is true whether such firms are located inside or outside of the United States.
Through the passage of the HFCAA, Congress reaffirmed the importance of our oversight activities in providing protection for investors in all U.S. public companies, regardless of where the companies’ audit firms are located or their audits are performed.
Rule 6100 establishes a framework for the determinations we are required to make under the HFCAA. This framework will help to promote consistency in our determinations and to provide transparency to investors, firms, issuers, foreign authorities, and other market participants as to the factors the Board will consider and the processes it will use in making and publicly reporting its determinations. Furthermore, the framework includes a mechanism whereby the Board will reassess its determinations every year, which will provide increased clarity and certainty to market participants over time.
Transparency of the Board’s framework is particularly important given the potential consequences that might follow Board determinations under the HFCAA for issuers, investors, and the broader capital markets.
In addition to setting forth the key factors the Board will assess in making determinations, the rule promotes transparency by requiring the Board to describe in a public report its assessment and the basis for its conclusion for any determination it makes.
The rule also requires the Board to reassess and publicly report on its determinations at least annually, which will help ensure market participants remain timely informed of the status of our ability to inspect or investigate completely audit firms in the covered foreign jurisdictions. In this way, the final rule provides more certainty to market participants than was provided by the two-step reassessment approach set forth in the proposal.
I therefore support the rule before us. It provides the Board a clear and consistent approach for making its determinations and for keeping all interested market participants well informed through timely public reporting.
In closing, I want to thank all those at the PCAOB who have contributed to developing today’s final rule; including our staff in the Offices of International Affairs, General Counsel, and Economic and Risk Analysis and with special recognition for Liza McAndrew Moberg, Beth Hilliard Colleye, Ken Lench, Drew Dropkin, and Damon Andrews. I also want to thank the Commission’s staff for their support and assistance.