The Sarbanes-Oxley Act of 2002 requires the PCAOB to inspect registered public accounting firms in both the US and in foreign jurisdictions. Under the Sarbanes-Oxley Act, the PCAOB must also investigate potential statutory, rule, and professional standards violations committed by registered public accounting firms and their associates. In compliance with the HFCAA’s requirements, the PCAOB must determine if it is unable to inspect or investigate completely registered public accounting firms in foreign jurisdictions because of a stance taken by an authority in that jurisdiction.

The adoption of PCAOB Rule 6100 institutes the following:

1. the process for the PCAOB’s determinations under the HFCAA
2. factors the PCAOB will assess and the documents and information the PCAOB will consider when evaluating whether a determination is justified
3. the public availability, form, effective date, and duration of such determinations
4. the manner in which the PCAOB will reaffirm, modify, or vacate any such determinations 

Earlier in 2021, the SEC approved interim final rules to execute its mandated rulemaking under the HFCAA. Those rules are expected to be finalized before the end of the year.

The new rule enhances safeguards for US investors by:

• guaranteeing that investors experience the same level of confidence from the quality of the audits of all issuers regardless of where their registered public accounting firm is located
• emphasizing how the alliance between the SEC and the PCAOB ensures that the auditors of foreign companies accessing US capital markets all adhere to the same guidelines and requirements

The SEC’s order approving PCAOB Rule 6100 will go into effect immediately and will be published in the Federal Register.

Source:

SEC Approves PCAOB Rule to Establish A Framework for Determinations Under the Holding Foreign Companies Accountable Act (sec.gov)