Republican lawmakers want to scrap the US audit regulator, the Public Company Accounting Oversight Board (PCAOB), to help deliver Donald Trump’s deregulatory plans.
On Friday, the House Committee on Financial Services leadership first proposed the audit regulator shutdown. However, Democrats will most probably resist the closing plans for the agency.
The PCAOB’s responsibilities could be pushed to the Securities and Exchange Commission if the bill passes
The PCAOB was introduced roughly twenty years ago, after the fall of Enron in 2001, to monitor audit practices and regularly inspect US auditing firms.
However, as per the proposed legislation, the audit regulator will no longer be operational if passed, and the Securities and Exchange Commission will absorb its duties. The levy imposed on listed companies and broker-dealers that fund the PCAOB will also be eliminated.
So far, some accounting firms have complained about the leadership of chair Erica Williams, hinting that some may be pleased with the closure of the audit regulator. Some have raised concerns over the organization of new strict policies and the high fines it receives from its enforcement actions.
The Center for Audit Quality — which represents the largest accounting firms, has called for the agency to do a better job of listening but has refrained from seeking its elimination.
Democrats, on the other hand, are more likely to dispute Republican plans to close the audit regulator.
If the PCAOB closed, the agency’s employees would be most inconvenienced. Some will probably lose their jobs, and if the government absorbs them into the SEC, their pay will have to be reduced.
Republicans are pushing for a major tax bill that could permanently alter the non-profit sector
Congress is working to pass a major tax bill that analysts project could disrupt the nonprofit sector before the 2017 Tax Cuts and Jobs Act expires later in the year.
Steve Taylor, a lifelong Republican, even remarked, “It isn’t too late to intervene before Republicans in Congress enact a massive new tax bill. But those interventions can’t come soon enough.”
The proposed changes extend beyond removing tax exemptions for universities and hospitals, pushing Congress to eviscerate section 501(c) of the federal tax code. That includes added requirements for non-profits to avoid levies.
Trump has suggested revoking tax-exempt status for all non-profits, a move analyst Ben Gose has encouraged fear among key players. However, lawyer Jeffrey Tenenbaum has assured some non-profit companies that the government does not have the authority to remove anyone’s exempt status “with a stroke of a pen.”
He claimed revoking a tax-exempt status could take a long time, and ideally, it would need to start with an audit. If the audit results in a proposed revocation, the nonprofit can appeal first to the IRS and then through the courts.
