What is the role of the US Public Accounting Oversight Board in this act?

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The Public Company Accounting Oversight Board (PCAOB) Audits are Central to the Holding Foreign Companies Accountable Act

The Holding Foreign Companies Accountable Act mandates that foreign companies seeking to list on US exchanges must comply with audits conducted by the US Public Accounting Oversight Board (PCAOB). Failure to meet these auditing requirements for three consecutive years can result in the delisting of their securities from US exchanges. This legislation, passed by the US House of Representatives and expected to be signed into law by President Trump, specifically targets foreign companies, including several Chinese firms, that have not adhered to US auditing standards.
PCAOB's Role in Ensuring Audit Quality

The PCAOB was established by the Sarbanes-Oxley Act of 2002 with the primary objective of overseeing the audits of public companies to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. It achieves this by setting auditing and ethical standards for registered public accounting firms and by inspecting these firms to assess their compliance with those standards. The board's authority extends to investigating and disciplining registered firms and their associated persons for violations of laws, rules, or securities regulations.
The Three-Year Non-Compliance Clause

Under the Holding Foreign Companies Accountable Act, a foreign company's securities are barred from listing on any US exchange if the company has failed to allow the PCAOB to conduct its required audits for three consecutive years. This provision directly links a company's access to US capital markets to its willingness to submit to PCAOB oversight, aiming to ensure a baseline level of transparency and reliability in financial reporting for companies whose shares are traded in the United States.
Application to Foreign Companies

While the Holding Foreign Companies Accountable Act applies universally to foreign companies, its passage is widely seen as a measure to address concerns regarding the auditing practices of Chinese companies. Firms such as Alibaba, Pinduoduo Inc., and PetroChina Co Ltd. are cited as examples of the types of companies this legislation is intended to impact. The act seeks to level the playing field by requiring foreign issuers to meet the same rigorous auditing standards as domestic US companies.

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What is the role of the US Public Accounting Oversight Board in this act?

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