The U.S. Securities and Exchange Commission (SEC) has removed four of the five board members of the Public Company Accounting Oversight Board (PCAOB) and has approved substantial changes to the agency’s budget, eliminating significant funds used for recruitment and relocation and making deep cuts to board member compensation.

Established as part of the Sarbanes-Oxley Act of 2002 in response to the collapse of companies like Enron Corp., the PCAOB oversees the public accounting firms who perform the annual audits required for publicly traded companies, as well as those firms who audit broker-dealers registered with the SEC. The board does so by setting audit standards, conducting inspections of firms and their audit work, and pursuing enforcement actions when the board approves such a step. 

The SEC has appointed Demetrios “Jim” Logothetis to become the new chair. Logothetis is a retired EY auditor who held several leadership roles at the firm, including serving as vice chair of global accounts. Mark Calabria, Kyle Hauptman, and Steven Laughton have been named as new board members. George Botic, the current acting chair of the board, will continue on as the acting chair until Logothetis is sworn in. PCAOB board members serve staggered terms. Calabria, Hauptman, and Laughton’s tenures will run through October 2027, 2029, and 2026, respectively. 

A revamp of the PCAOB board members when an administration changes is nothing new. But among those being replaced are Kara Stein, herself a prior commissioner at the SEC, and Tony Thompson, who previously had been executive director of the Commodity Futures Trading Commission and the chief budget officer for the U.S. Air Force.

The changes appear to continue the pattern of SEC Chair Paul Atkins’ efforts to return to a “back to basics” approach to oversight and enforcement at the SEC and PCAOB. Audit firms considered certain proposed revisions aimed at expanding the PCAOB’s role in auditor oversight by previous board chair Erica Williams to potentially create an unnecessary burden on public auditors and “fundamentally alter the role of auditors” by, among other things, imposing a heightened duty to detect fraud and illegal activity. Williams resigned in July 2025 at the request of Atkins. Williams previously had served in the counsel’s office of the Obama administration and as deputy chief of staff at the SEC.  

The SEC’s appointment of the new board members has been criticized by some politicians who consider the changes out of line with the PCAOB’s mission to protect investors and foster appropriate qualitative and quantitative disclosures to shareholders of publicly traded companies.

The SEC also slashed the PCAOB’s budget by nearly 10%, which includes significant cuts to funds available for employee recruitment and relocation costs. The board members have also taken a cut in pay — the chair’s compensation has been reduced by 52% and the board members’ compensation has been slashed by 42%. These moves come after years of complaints that the PCAOB salaries, though earned through the mandatory fees the PCAOB charges public company auditors, were disproportionately high and out of line with salary caps at federal agencies like the SEC.

While the implications for public companies remain to be seen, their auditors are likely to see less harsh inspection results and fewer enforcement actions. Both auditors and public companies are nonetheless encouraged to maintain strong compliance programs and to properly apply those standards in the preparation and audit of financial statements and public company filings made with the SEC.

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