US audit regulator scraps investor advocate role as Trump-era revamp accelerates

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The US audit watchdog is shutting down a division set up to advocate for shareholders in a move that underscores a switch of focus under Donald Trump’s administration.

The decision by the Public Company Accounting Oversight Board (PCAOB) disappointed investor advocates, who feared their views on audit regulation could be sidelined if the organisation prioritises the opinions of company directors and accounting firms.

“Investors are a disparate group, not an organised group like other constituents,” said Elizabeth Mooney, former partner for capital strategy research at the asset manager Capital Group. “It is important to pull together their feedback and make sure the board hears it, given the importance to capital markets.”

The PCAOB, which was created in the wake of the collapse of Enron and other accounting scandals 25 years ago to oversee audit firms, is being reshaped by the Trump administration with a reduced budget and dramatically lower enforcement activity.

Staff were told on Monday that the office of the investor advocate would close by October, according to people familiar with the matter. The division was created in 2023 as the Biden administration moved to increase the influence of shareholders inside the organisation.

The PCAOB is overseen by the Securities and Exchange Commission, which appoints its chair and has to approve its budget. The SEC’s chair and commissioners are selected by the president.

The PCAOB has the power to inspect accounting firms that audit US public companies. The office of the investor advocate acted as a conduit for shareholder views on audit standards and inspection priorities. It also produced information for shareholders on how to make their views on auditors known in the boardrooms of the companies they owned.

Lynn Turner, a former SEC chief accountant, criticised the PCAOB’s decision. “The trouble is it won’t have an advocate for investors inside its four walls,” he said.

A spokesperson for the PCAOB said the change would “promote greater consistency, reduce duplication and strengthen execution” across the organisation’s efforts to engage with shareholders.

It would also “elevate” the voices of shareholders because board members, including chair Jim Logothetis, would become more directly involved, the spokesperson said. “The chair will be taking more of a hands-on approach to communications and engagement across all stakeholders, including investors.”

The PCAOB’s budget was cut by 9 per cent this year from 2025, and the organisation brought in consultants to advise on restructuring. The FT reported in May that more deep staff cuts were under consideration as leaders plan to divert resources to investing in technology.

Logothetis, a former partner at EY who in January became the first former auditor to be appointed PCAOB chair, has said the organisation needs to widen its outreach and remain apolitical to protect its reputation.

He has sought more input from directors who sit on the audit committees of corporate boards and established a fellowship programme to bring practising auditors into the PCAOB.

The organisation will continue to have an investor advisory group (IAG) representing shareholders, which meets twice a year.