What changed between these versions
A substantive restructuring. v2 significantly strengthens the direct integration of the Public Company Accounting Oversight Board's functions into the Securities and Exchange Commission by replacing references to a new "Office" with "the Commission" and clarifying that PCAOB rules become SEC rules. It also expands technical amendments to further remove PCAOB references and adds Commission approval for the standard-setting body's budget.
Overview
Extensive changes, particularly concentrated in Title V, with several minor technical adjustments in other titles. · The overall direction is a more complete and direct integration of the Public Company Accounting Oversight Board's functions into the Securities and Exchange Commission, moving from a concept of a new "Office" within the SEC to direct Commission oversight.
The most significant change in v2 is the shift in Title V to directly transfer the functions of the Public Company Accounting Oversight Board (PCAOB) to the Securities and Exchange Commission (SEC), rather than to a newly established "Office of Public Accounting Oversight" within the SEC. This is evident through global amendments replacing "the Office" with "the Commission" and clarifying that PCAOB rules will become SEC rules. Additionally, v2 expands technical amendments to remove more references to the PCAOB and introduces Commission approval for the standard-setting body's budget, further solidifying SEC control. Minor technical corrections were also made to cross-references and subsection numbering in other titles.
Major additions
These new subsections add amendments to Section 102(d) and Section 102(e) of the Sarbanes-Oxley Act of 2002, respectively. Both amendments strike the phrase "the Board or" from the existing text, removing references to the Public Company Accounting Oversight Board in relation to registration requirements.
These additions further streamline the transfer of oversight responsibilities by explicitly removing the PCAOB from statutory language concerning registration with the new Office, reinforcing the SEC's direct authority over these processes.
This new subsection amends Section 3 of the Sarbanes-Oxley Act of 2002. It strikes "or any rule of the Board" from subsection (b) and "or the rules of the Board" from subsection (c), effectively removing statutory references to the rules of the Public Company Accounting Oversight Board.
This addition clarifies that upon the termination of the PCAOB, its rules will no longer be separately referenced in the Sarbanes-Oxley Act, aligning with the intent for PCAOB rules to become Commission rules and centralizing regulatory authority under the SEC.
This new subsection amends Section 404(b) of the Sarbanes-Oxley Act of 2002 by striking "Board" and inserting "Commission." This transfers the responsibility for internal control evaluation and reporting from the Public Company Accounting Oversight Board to the Securities and Exchange Commission.
This addition directly assigns the oversight of internal control evaluation and reporting to the SEC, ensuring that this critical function is fully integrated into the Commission's responsibilities and accountability structure.
Deletions
In v1, Section 503(3) amended SOX 102(c)(2) by striking specific text within it, which related to the public availability of registration applications. In v2, the entire paragraph (2) of SOX 102(c) is struck, along with the preceding introductory phrase "Applications.--" and text up to "The Board."
The deletion of SOX 102(c)(2) removes the statutory requirement for the public availability of registration applications and related information for public accounting firms. This change reduces the explicit transparency requirements for the registration process, potentially limiting public access to certain details about firms seeking oversight.
Modifications
This modification provides the SEC with more flexibility in its cost-benefit analysis for regulations, allowing for consideration of benefits and costs that may be difficult to quantify but are still relevant and practical to assess. This could lead to a wider range of factors being considered in rulemaking decisions.
Before
Required the Commission to choose an approach that maximizes benefits net of costs "to the extent quantifiable."
After
Requires the Commission to choose an approach that maximizes benefits net of costs "to the extent practicable."
This modification formalizes the role of the Chief Economist in the development of post-adoption impact assessment plans for major rules, ensuring economic expertise is integrated into the planning process for evaluating regulatory effectiveness.
Before
Stated that "the Commission shall establish an assessment plan" for post-adoption impact assessments.
After
States that "the Commission, in consultation with the Chief Economist, shall establish an assessment plan" for post-adoption impact assessments.
This change signifies a more direct and complete integration of the PCAOB's functions into the SEC's existing structure, rather than establishing a distinct, albeit internal, "Office." This could mean less operational autonomy for the new oversight body and more direct control by the SEC Commissioners over accounting oversight functions.
Before
Globally replaced references to "the Board" with "the Office" and "the Board's" with "the Office's" throughout Title I of the Sarbanes-Oxley Act of 2002.
After
Globally replaced references to "the Board" with "the Commission" and "the Board's" with "the Commission's" throughout Title I of the Sarbanes-Oxley Act of 2002.
This is a technical correction to ensure consistency with the actual short title of the bill, having no substantive policy impact.
Before
Amended SOX 101(d) to change a reference to "1 year after the date of the enactment of the Streamlining Public Company Accounting Oversight Act."
After
Amended SOX 101(d) to change a reference to "1 year after the date of the enactment of the SEC Reform and Restructuring Act."
The deletion of SOX 101(h), which previously required an annual report by the PCAOB (or the Office), removes a specific reporting requirement from the statute. This aligns with the broader integration of functions into the SEC, where such reporting would likely be subsumed under the Commission's general reporting obligations.
Before
Struck subsections (e), (f), and (g) of Section 101 of the Sarbanes-Oxley Act of 2002.
After
Struck subsections (e), (f), (g), and (h) of Section 101 of the Sarbanes-Oxley Act of 2002.
This reinforces the direct transfer of PCAOB's regulatory authority to the SEC, ensuring continuity and clarity that existing PCAOB rules will be treated as SEC rules upon the Board's termination. It centralizes the authority for this transition within the Commission.
Before
Required the "Director of the Office of Public Accounting Oversight" to publish "all rules that are transferred to the jurisdiction of the Office."
After
Required "The Commission" to publish "a notice that all rules of the Public Company Accounting Oversight Board shall remain in effect as Commission rules."
This modification transfers the responsibility for including specific information (related to auditing standards) from the PCAOB's annual report to the SEC's annual performance report to Congress. This further integrates the oversight functions into the SEC's existing accountability mechanisms.
Before
Amended SOX 103(d) by changing a cross-reference from "101(h)" to "101(g)."
After
Amended SOX 103(d) by striking "The Board shall include in the annual report required by section 101(h)" and inserting "The Commission shall include in the Commission's annual performance report to Congress."
These changes further remove statutory references to the PCAOB in the context of foreign public accounting firms, reinforcing the SEC's singular authority in this area.
Before
These subsections were not present in v1.
After
These subsections add amendments to Section 106(a) of the Sarbanes-Oxley Act of 2002, striking "or the Board" each place it appears and striking "the Board and" from subsection (a).
This change increases the SEC's direct oversight and control over the financial operations of the standard-setting body, potentially influencing its priorities and resource allocation.
Before
Required the standard setting body to establish a budget, which would be reviewed and approved according to its internal procedures.
After
Required the standard setting body to establish a budget, which would be reviewed and approved according to its internal procedures and "subject to approval by the Commission."
This clarification ensures that the funding mechanism for the Office (and by extension, the SEC's accounting oversight function) remains distinct from general government appropriations, maintaining a dedicated funding source derived from accounting support fees.
Before
Stated that the Office's budget "may be payable from annual accounting support fees... Accounting support fees and other receipts of the Office."
After
Stated that the Office's budget "may be payable from annual accounting support fees... Accounting support fees and other receipts of the Office shall not be considered public monies of the United States."
These changes further refine the definitions within the Sarbanes-Oxley Act to remove explicit references to the PCAOB, ensuring consistency with the direct transfer of its functions to the SEC.
Before
v1 only redesignated paragraphs (5) and (6) as (6) and (7) in SOX 110.
After
v2 additionally amends SOX 110(1) by striking "the Board or" and amends SOX 110(6)(B) (as redesignated) by striking "the Board or."
These extensive technical amendments further solidify the legal framework for the direct transfer of PCAOB functions to the SEC, ensuring consistency in terminology and authority across the Sarbanes-Oxley Act. This reduces potential ambiguities regarding the SEC's direct role in accounting oversight.
Before
Amended SOX 2(a)(9)(C) only.
After
Significantly expanded amendments to SOX 2(a), including striking paragraphs (5) and (13), redesignating others, and striking "Board" or "the Board or" in multiple paragraphs (2), (8), (9), (10), (11).
This is a minor clarification, broadening the scope of protected international collaborations to explicitly include "agreements" alongside "arrangements," ensuring that a wider range of existing international cooperation mechanisms remain valid during the transition period.
Before
Referred to "a cooperative arrangement" between the PCAOB and a foreign auditor oversight authority.
After
Referred to "a cooperative arrangement or agreement" between the PCAOB and a foreign auditor oversight authority.
This is a technical correction to ensure proper numbering of subsections within Section 4 of the Securities Exchange Act and accurate referencing of prior amendments, having no substantive policy impact.
Before
Added subsection (m) to Section 4 of the Securities Exchange Act of 1934, referencing amendment by section 401.
After
Added subsection (l) to Section 4 of the Securities Exchange Act of 1934, referencing amendment by section 201.
This is a technical correction to ensure proper numbering of subsections within Section 4 of the Securities Exchange Act, having no substantive policy impact.
Before
Added subsection (n) to Section 4 of the Securities Exchange Act of 1934.
After
Added subsection (m) to Section 4 of the Securities Exchange Act of 1934.
Scope
Meaningful expansion or narrowing — Changes are concentrated heavily in Title V, which redefines the structure of public company accounting oversight, with minor technical and conforming amendments scattered across other titles. — v2 represents a meaningful shift in policy direction within the scope of accounting oversight. While both versions aim to streamline the PCAOB into the SEC, v2 moves towards a more complete and direct absorption of PCAOB functions and authority directly into the Commission, rather than maintaining a semi-autonomous 'Office' structure. — The changes in Title V, particularly the global amendments and expanded technical corrections, interact extensively with existing provisions of the Sarbanes-Oxley Act by systematically replacing references to the PCAOB with the SEC, thereby altering the operative authority and reporting lines across numerous sections.
Impact analysis
Securities and Exchange Commission (SEC)
Gain
The SEC gains more direct and explicit control over public company accounting oversight functions, including budget approval for the standard-setting body and direct responsibility for PCAOB rules and reporting.
Public Company Accounting Oversight Board (PCAOB) and its successor 'Office of Public Accounting Oversight'
Loss (of autonomy/distinct identity), Procedural Change
The PCAOB's functions are more fully absorbed into the SEC, with less operational autonomy for the new 'Office' than initially implied in v1. Its rules directly become SEC rules, and its reporting requirements are integrated into the SEC's.
Public accounting firms subject to oversight
Procedural Change, Loss (of transparency requirements)
The regulatory authority overseeing them shifts more definitively to the SEC, potentially streamlining interactions but also removing specific transparency requirements related to registration applications.
Standard-setting body for accounting standards
Procedural Change
Its annual budget becomes subject to direct approval by the SEC, increasing SEC influence over its financial operations and priorities.
Stakeholders interested in transparency of accounting firm registration
Loss
The explicit statutory requirement for public availability of registration applications (SOX 102(c)(2)) is removed.