US Audit Board Chair Resigns Under Pressure From Trump’s SEC (2)

The chair of the US audit board said Tuesday that she will step down later this month at the request of SEC Chair Paul Atkins, setting up the third swing in leadership and priorities since 2017 for the Enron-era regulator.

Erica Williams’ resignation gives the Trump administration the freedom to name a new steward and reshape the agenda of the Public Company Accounting Oversight Board, the regulator tasked with overseeing US auditors. The Securities and Exchange Commission oversees the board’s budget and appoints its members, who serve five-year staggered terms.

Williams informed PCAOB staff late Tuesday, according to an email obtained by Bloomberg Tax.

“With high economic uncertainty increasing the risk of fraud, the PCAOB’s mission is as important as ever,” Williams said in a statement. “It’s critical the expert PCAOB staff continue to be empowered to carry out their work of ensuring American investors are protected.”

Her pending departure leaves the audit regulator without a steward at a critical juncture for an agency Congress created to be an independent watchdog. Republicans tried to zero out the board’s funding and transfer the agency’s mission to the SEC as part of their massive tax and spending bill, but were forced to pull the measure to meet Senate rules.

The proposal, which the PCAOB campaigned against forcefully, would have stripped out the cornerstone of a landmark corporate reform law that regulated the audit industry in order to restore investor trust in corporate reporting after accounting scandals toppled Enron Corp. and WorldCom Inc.

Without those structural reforms, the SEC can continue to influence the PCAOB under its existing authority.

Atkins, during his previous stint on the commission, called to keep the board’s spending and rule-writing in check. But during a June budget hearing, he told senators that the board’s duties “are vital” and said he would seek additional funding for the SEC to carry out that work.

Calling to reset the commission’s priorities, Atkins has promised to review disclosure requirements, craft new rules for the crypto market, and focus the commission’s enforcement on fraud that harms investors. Replacing PCAOB leadership could trigger a similar swing in the audit regulator’s agenda.

“We look forward to advancing our oversight responsibilities of the PCAOB as it continues its important work,” Atkins said in a statement confirming Williams’ resignation.

Priority Shift

Williams, who took the helm in 2022 and had four years left of her current term, jolted the audit industry by tripling financial penalties to $35.7 million for enforcement cases in the past three years and highlighting rising deficiencies in routine audit inspections. She sparked industry ire as she marched to set higher standards for how auditors vet corporate financial statements with a suite of rule updates.

But new leadership at the SEC has already forced the board to shelve rule changes on disclosures and how auditors respond to corporate lawbreaking.

The audit industry has pushed for its regulator to be more receptive to concerns about what auditors see as flawed, rushed rule-writing and sought a more restrained approach to enforcement.

Atkins could seek deeper changes to the board’s makeup beyond replacing its chair, repeating the playbook from the Biden and first Trump administrations.

Then-SEC Chair Jay Clayton took advantage of expired or nearly expired terms to replace all five members of the board in 2017. Just four years later, Biden SEC Chair Gary Gensler fired the head of the PCAOB and asked other board members to reapply for their seats.

Under Atkins, the SEC could also demand the PCAOB roll back its budget, shrink its staff, or possibly cut board members’ pay.

Board members are among the highest-paid financial regulators in Washington, though they have gone without a pay raise since 2009. The PCAOB chair earns $673,000 and the other board members earn $547,000 annually.