Enforcement", treats a violation of the Rules of the Public Company Accounting Oversight Board as a violation of the '34 Act, giving rise to the same penalties. It is unclear if this means waiver after waiver, as in present SEC enforcement. Even if it does, the Rules may still be more effective because US state regulators can forfeit an accountant's license based on a waived injunction.
The Act's provision, in Section 101, for the membership of said Board has yet to be fleshed out. Appointed to five- year terms, two of the members must be - or have been - certified public accountants, and the remaining three must not be and cannot have been CPAs. Lawyers are the likeliest to be appointed to these other seats. The Chairmanship may be held by one of the CPA members, provided that he or she has not been engaged as a practicing CPA for five years, meaning, ab initio, that he or she will be behind the practice curb at a time when change is rapid.
No Board member may, during their service on the Board, "share in any of the profits of, or receive payments from, a public accounting firm," other than "fixed continuing payments," such as retirement payments. This mirrors SEC practice with the securities industry, but does little to tackle "the revolving door".
The Board members are appointed by the SEC, "after consultation with" the Federal Reserve Board Chairman and the Treasury Secretary. Given the term lengths, it is safe to predict that every new presidential administration will bring with it a new Board.
The major powers granted to the Board will effectively change the accounting profession in the USA, at least with regards to public companies, from a self-regulatory body licensed by the states, into a national regulator.
Under Act Section 103, the Board shall: (1) register public accounting firms; (2) establish "auditing, quality control, ethics, independence, and other standards relating to the preparation of audit reports for issuers;" (3) inspect accounting firms; and (4) investigate and discipline firms to enforce compliance with the Act, the Rules, professional standards and the federal securities laws. This is a sea change in the US.
As to professional standards, the Board must "cooperate on an on-going basis" with certain accountants advisory groups. Yet, US federal government Boards do not "co- operate" - they dictate. The Board can "to the extent that it determines appropriate" adopt proposals by such groups.
More importantly, it has authority to reject any standards proffered by said groups. This will then be reviewed by the SEC, because the Board must report on its standards to the Commission every year. The SEC may - by rule - require the Board to cover additional ground. The Board, and the SEC through the Board, now run the US accounting profession.
The Board is also augments the US effort to establish hegemony over the global practice of accounting. Act Section 106, Foreign Public Accounting Firms, subjects foreigners who audit U.S. companies - including foreign firms that perform audit work that is used by the primary auditor on a foreign subsidiary of a U.S. company - to registration with the Board.
I am amazed that the EU was silent on this inroad to their sovereignty. This may prove more problematic in US operations in China. I do not think the US can force its accounting standards on China without negatively affecting our trade there.