Dive Brief

• The Securities and Exchange Commission on Thursday approved a $362 million 2026 budget for the Public Company Accounting Oversight Board, or 9.4% less than last year, according to an SEC press release. The SEC also cut the board’s accounting support fee by 18.4% to $306 million, reducing the cost to public companies and broker-dealers that fund the board.
• Moreover, the SEC slashed compensation for the auditor watchdog’s chair and other board members by 52% and 42%, respectively. The salary cuts align the pay “more closely with the ethos of public service,” SEC Chair Paul Atkins said in a statement, adding that he believes the PCAOB’s mission “remains crucial.”
• “Both during my time as a commissioner and now as chairman, I have recognized — and continue to recognize — the importance of driving improvements in audit quality,” Atkins said. “Nevertheless, all regulators, including the commission and the PCAOB, must continually assess how and whether current approaches to fulfilling the board’s responsibilities provide benefits to investors without imposing excessive burdens on businesses.”

Dive Insight:

The PCAOB, an independent watchdog created in 2002 by Congress following multi-billion-dollar accounting scandals at Enron and WorldCom, has faced political pressure and possible elimination as the Trump administration seeks to soften regulation and slash federal spending.  

A provision that would have effectively dissolved or reorganized the PCAOB by folding its authority into the SEC was scuttled and removed from the Big Beautiful Budget Act before it was passed, winning the board a lifeline.  But watchers of the PCAOB have said that the board could be “defanged” or weakened through other measures including budget cuts. 

Francine McKenna, an adjunct professor who teaches accounting at Montclair State University in Montclair, New Jersey, and author of the accounting newsletter, “The Dig,” predicted that the leaner budget will prompt the board to reduce enforcement.

“Enforcement is what’s really going to be squeezed,” she said Thursday in an interview. 

McKenna, who had previoiusly expected that the PCAOB would be eliminated, said instead that the budget signals it will continue operating while only paying lip service to the regulatory authority and oversight it was established to provide.   

The budget “is part and parcel with lots of levers being pulled to say the PCAOB is going to be diluted as a regulator of public accounting firms that are auditing public companies,” McKenna said, adding that the board’s reduced funding is part of the deregulatory and pro-IPO focus of Atkins and the administration.