Proposal would mean less oversight for some B-D auditors
An amendment to legislation to be considered today by the House Rules Committee could exempt accounting firms that audit certain broker-dealers from having to register with the Public Company Accounting Oversight Board.
An amendment to legislation to be considered today by the House Rules Committee could exempt accounting firms that audit certain broker-dealers from having to register with the Public Company Accounting Oversight Board.
The amendment to the Wall Street Reform and Consumer Protection Act of 2009 (HR 4173), offered by Rep. Paul Kanjorski, D-Pa., chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, and Rep. Scott Garrett, R-N.J., the subcommittee’s ranking minority member, would give the PCAOB the discretion to write rules that could exempt auditors of introducing broker-dealers.
If the board were to exempt auditors from introducing broker-dealers, those accountants would face less regulation than they do presently. Under current Securities and Exchange Commission rules, auditors of introducing broker-dealers must register with the PCAOB, but the oversight board does not have full regulatory authority to inspect or discipline those auditors.
The legislation currently pending would require auditors of all broker-dealers to be fully regulated by the PCAOB. Small broker-dealers who do not hold custody of client assets have strongly opposed the provision, arguing that it would greatly increase the expense of audits for them. Draft legislation being considered by the Senate Banking Committee includes a similar provision as the House bill.
Under the compromise amendment to the House bill, “the board has full discretion to write any sort of rule on inspection that it wants, and everyone covered by the inspection rule still has to register,” said Mat Young, director of congressional and political affairs at the American Institute of Certified Public Accountants.
“But if they write the rule such that certain auditors of broker-dealers are not covered by the inspection rule, those non-covered auditors of broker-dealers would no longer have to register either,” he said.
That would result in more conformity between registration and full regulation of auditors by the PCAOB, Mr. Young said.
“We want to synchronize registration and inspection,” he said. “There isn’t a lot of utility in registering if you don’t do anything with that information.”
The House Rules Committee is to meet this afternoon to decide which amendments will be voted on when the full House takes up the sweeping financial-reform legislation. The House is likely to consider the Wall Street reform bill this afternoon. A vote on the landmark legislation is expected in the next few days.
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