PCAOB Budget Cut Means Relief for PubCos, Broker‑Dealers-
The Securities and Exchange Commission has announced a reduction in the Public Company Accounting Oversight Board’s (PCAOB) 2026 budget, including a significant 18.4% reduction in the Accounting Support Fee (ASF), which is money assessed annually on public companies and registered broker‑dealers. Both groups will see immediate relief this year.
The PCAOB’s operations and inspection of audit firms are funded entirely through the ASF, which is allocated proportionally across public companies and broker‑dealers based on audit hours and market‑based metrics.
For 2026, the ASF totals $306.0 million, of which $280.3 million will be assessed on public companies, and $25.7 million will be assessed on brokers and dealers. By comparison, the PCAOB’s 2025 ASF was $374.9 million, of which $346.1 million was assessed on public companies and $28.8 million on broker‑dealers.
Public companies and broker‑dealers will begin seeing the impact of the reduced accounting support fees in their 2026 annual assessments because the lower fees became effective January 1, 2026, and the PCAOB will be issuing updated assessment notices during the first quarter.
The reduction in the PCAOB’s budget is a result of leadership change at the SEC under new Chair Paul Atkins, who also recently appointed a new PCAOB Chair and several new Board members (see article below).
The SEC was given oversight responsibility over the PCAOB when it was established by the Sarbanes-Oxley Act of 2002.
In explaining the 2026 budget cut, the SEC emphasized that the PCAOB’s core mission of protecting investors and enhancing audit quality remains unchanged. Atkins said, “For the [SEC] Commission, its diligent oversight of the PCAOB is a crucial check on the considerable authority that the [PCAOB] Board holds over audit firms and the risks of potentially excessive burdens.”
“A significant aspect of this oversight is the Board’s budget,” he added. “The PCAOB must exhibit a strong commitment to responsible stewardship of the accounting support fee, which is its primary source of funding and functions as a tax on public companies and broker-dealers.”
“The decrease in this year’s budget does not detract from the significance of the PCAOB’s mission, which remains crucial; rather, it underscores that fiscal discipline and regulatory effectiveness complement each other,” he continued.
The SEC has appointed Demetrios (Jim) Logothetis as the new Chairman of the PCAOB, and has replaced all but one Board member, as the audit regulator enters a refocusing of priorities under SEC Chair Paul Atkins. The other incoming members: Mark Calabria, Kyle Hauptman and Steven Laughton, will join continuing Board member George Botic, who remains Acting Chair until Logothetis is sworn in.
Announcing the appointments, Atkins said he expects the new leadership “to usher in a new day at the PCAOB—one of sensible, efficient oversight of auditors,” emphasizing a renewed focus on investor protection and what he described as “public‑service‑aligned compensation.”
These appointments follow a well‑established rhythm in federal financial regulation: a change in the White House typically leads to the selection of a new SEC Chair, who then reshapes the PCAOB Board. Because the PCAOB operates under SEC oversight, its leadership often turns over shortly after the White House does, aligning the audit regulator’s priorities with those of the newly appointed Commission.
CompensationSharply Reduced
The new Board will assume their roles under a dramatically revised compensation structure. As part of the reduction in the PCAOB’s 2026 annual budget, the SEC reduced PCAOB Board compensation by 52% for the Chair and 42% for Board members, marking the steepest adjustment in the organization’s history.
Under the new compensation, the PCAOB Chair will receive $330,000 annually compared to the $690,000 given to his predecessor. Board members will receive an annual 2026 compensation of $325,000 compared to their predecessors’ salaries of $565,000.
Even with this compensation reduction, the PCAOB Chair and board members still will earn more than their boss, the SEC Chair, whose 2026 compensation is around $203,000. The SEC Chair, whose Commission has oversight of the PCAOB, is compensated at the Executive Schedule Level III rate.
The reductions reflect the SEC’s stated intent to align PCAOB leadership pay more closely with federal public‑service norms, a notable departure from the historically high compensation levels that have long distinguished the audit regulator from other financial oversight bodies.
In a major move to modernize oversight, the SEC has proposed a sweeping update to how it defines “small entities,” which has remarkably remained unchanged since 1998.
The proposal specifically affects registered investment companies, investment advisers, and business development companies (BDCs). By aligning outdated regulatory definitions with 2026 economic realities, the SEC aims to significantly broaden the group of firms qualifying for lighter regulatory scrutiny and reduced administrative burdens.
Rightsizing for 2026
The proposal addresses decades of market growth that had left previous definitions virtually obsolete in the modern financial landscape.
Under the new proposal, the threshold for an investment adviser to be considered a small entity would jump from $25 million to $1 billion in regulatory assets under management. Simultaneously, the net asset threshold for investment companies and BDCs would see an even more dramatic increase, rising from $50 million to $10 billion. These updates ensure that the Regulatory Flexibility Act (RFA) effectively protects firms with limited resources from “one-size-fits-all” regulations.
Easing the Regulatory Load
The redefinition is expected to increase the number of SEC-registered advisers classified as “small” from a mere 3% to approximately 75%. This shift forces the Commission to conduct deeper cost-benefit analyses, consider extended compliance timelines, and explore exemptions to reduce operational strain on these smaller entities.
Importantly, the proposal also introduces a periodic inflation adjustment every 10 years to prevent the definitions from becoming obsolete again.
More than 100 business associations are urging the Treasury Department to immediately destroy beneficial ownership information (BOI) collected from domestic companies, arguing that the data is no longer required and poses unnecessary cybersecurity risks.
In a recent letter to Treasury Secretary Scott Bessent, the groups also called for swift issuance of a final rule confirming that U.S. businesses are exempt from BOI reporting under the Corporate Transparency Act (CTA).
The signatories, representing “millions of Main Street businesses” and led by the Main Street Employers Coalition, said sensitive personal information, including names, addresses, and identification numbers, remains stored in a Financial Crimes Enforcement Network (FinCEN) database despite the administration’s rollback of domestic reporting requirements.
FinCEN issued an interim final rule in March 2025 eliminating BOI reporting for U.S. entities, although foreign companies remain covered. Before the change, roughly 16 million domestic entities were subject to the mandate, and FinCEN estimated 6.5 million BOI reports had already been filed.
The groups warned that ongoing litigation over the CTA, including a National Small Business Association case now headed to the Supreme Court, heightens the need for immediate action. They argued that retaining data no longer required by law “serves no legitimate government purpose” and increases the risk of misuse.
Weinberg welcomes Gavin Takeshita, CPA, as Audit Partner in the Los Angeles office, where he will support our growing international and US public company audit business. Gavin is a seasoned CPA with over 25 years of public accounting experience serving companies ranging from privately-held startup enterprises to publicly traded, mature, global companies.
Formerly with EY and most recently a Partner at BDO, Gavin is highly respected by peers for successfully leading complex audit engagements, primarily in the manufacturing and distribution, retail, technology, government contracting, restaurants, hospitality, and professional services industries.
His expertise includes US GAAP and GAAS, SEC reporting, SOX implementation and compliance, capital markets (including IPOs and other offerings), business combinations and due diligence, and communications with management and Audit Committees, as well as private equity-owned portfolio companies.
Gavin grew up in Hawaii, on the island of Oahu, and holds a B.S. in Accounting from the University of Southern California. He is a member of the AICPA and Nevada Society of CPAs and holds CPA licenses in the states of California and Nevada. In his spare time, Gavin is an avid sports fan (USC Trojans, Chicago Bears, LA Clippers, University of Hawaii) and volunteers his time on the Board of Directors of Junior Achievement of Southern Nevada.
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