Statement in Support of Proposed PCAOB Rulemaking Related to Board Determinations Under the Holding Foreign Companies Accountable Act

Thank you, Mr. Chairman. I am pleased to support the proposed new rule, PCAOB Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act (HFCAA).

The proposing release sets forth useful background information regarding the Board’s statutory inspection and investigation mandate, including how, over the years and as it relates to registered firms located outside the United States, the Board has worked effectively and co-operatively with authorities in most foreign jurisdictions to fulfil this mandate. The release also describes the core principles that underpin the practices and approaches that the Board has developed with foreign regulators to resolve conflicts to enable completion of inspections and investigations in accordance with the Board’s governing statute. However, positions taken by non-U.S. authorities in certain jurisdictions impede the ability of the Board to discharge its mandate.

Against this backdrop, the Holding Foreign Companies Accountable Act was signed into law. This Act imposes obligations on the PCAOB to make determinations regarding its inability 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 HFCAA also mandates the actions the Securities and Exchange Commission should take after the Board makes such a determination. The HFCAA does not however set forth the processes for the Board to follow in making determinations. The proposed rule is therefore important because it would establish the facets of the Board’s determination process, which would form the basis for both the Board’s compliance with, and the SEC’s implementation of the HFCAA. The proposed rule would also provide transparency as to how the Board will perform its functions and promote consistency in its determinations processes.  

I encourage interested parties to read the release and respond with their views and comments about matters that the Board should consider in preparing a final rule. The release contains a number of questions that address matters where we would, in particular, like to hear the perspectives of our stakeholders. Of course, commenters need not answer every question and are welcome to comment on other matters as well.

I would like to thank all the PCAOB staff from various divisions and offices who have worked very hard and thoughtfully to expeditiously progress this rulemaking. I would also like to thank the staff of the Securities and Exchange Commission for their valued input and perspectives.