In partnership with
|
STANDARDS TRACKER |
STANDARDS TRACKER
PCAOB Rule 2107(h): constructive withdrawal of delinquent registered firms
The PCAOB triggered its new constructive-withdrawal rule for the first time, putting 97 delinquent registered firms on notice that they have 60 days to respond
On November 5, 2026, the PCAOB issued Notices of Delinquency and Impending Withdrawal to 97 registered audit firms - the largest mass revocation action in the board's history, per CPA Practice Advisor. The action is the first use of PCAOB Rule 2107(h), Constructive Withdrawal Requests, which the board adopted in November 2024 to give itself a procedural mechanism for cleaning up its registration rolls without initiating individual disciplinary proceedings.
BY THE NUMBERS
|
See below EFFECTIVE |
1 SOURCE TRACKED |
|
Nov 9 LAST UPDATED |
PCAOB ISSUER |
Rule 2107(h) applies when a registered firm has failed both to file its PCAOB Form 2 annual report and to pay its annual fees for at least two consecutive reporting years, per CPA Practice Advisor. The rule is not a disciplinary proceeding; a withdrawal under it is not reported as a disciplinary sanction to interested authorities, the announcement says.
Per CPA Practice Advisor, each of the 97 firms' primary contacts has 60 days from the November 5 notice date to email PCAOB registration staff stating the firm's desire to remain registered. If no response is received, the PCAOB may deem the registration withdrawn.
PCAOB Chairman Demetrios (Jim) Logothetis said the action gives investors and market participants "a more accurate picture of the audit firms that remain active in the public company audit space," per CPA Practice Advisor.
For close teams at public companies, the practical question is auditor eligibility: any firm whose registration is withdrawn cannot issue audit opinions on SEC-registered issuers. If your engagement firm received a notice, confirm its status directly with PCAOB's registration records before year-end fieldwork is complete.
WHAT TO DO IN THE CLOSE
| Check the PCAOB registration database to confirm your engagement firm's status is active and not on the November 5, 2026 notice list. | |
| If your firm received a notice, obtain written confirmation it has responded to PCAOB registration staff within the 60-day window. | |
| Alert your audit committee if your engagement firm's registration is at risk; auditor eligibility affects opinion validity. | |
| Flag any third-party auditors (component auditors, specialists) used in your group audit for the same registration check. | |
| Document your registration-status confirmation in workpapers as of the date fieldwork concludes. |
The Ultimate Claude Code Guide to ship like Anthropic engineers
AI will write 90% of code by the end of 2026, and only 10% of developers will stay relevant.
The engineers in that 10% aren't smarter. They just know how to use AI.
We put together the exact playbook Anthropic engineers use to make sure you're in the top 10%.
Sign up for The Code and get access to:
The Ultimate Claude Code Guide 2026 — 50+ tips and tricks to code 5x faster
The Code newsletter — learn the latest AI tools, tips, and skills to code faster with AI in 5 minutes a day
SPONSORED
QUESTIONS THIS ANSWERS
Is a withdrawal under Rule 2107(h) a disciplinary sanction?
No. Per CPA Practice Advisor, a constructive withdrawal under Rule 2107(h) is not a disciplinary proceeding and is not reported as a disciplinary sanction. It is a registration-maintenance mechanism triggered by consecutive filing and fee delinquencies.
Can a firm that loses registration under Rule 2107(h) still do audit work?
CPA Practice Advisor's report does not state whether a withdrawn-but-operational firm retains eligibility to perform non-SEC audit work. An unregistered firm cannot issue audit opinions for SEC-registered issuers.
How does a firm stop the Rule 2107(h) withdrawal process?
The firm's primary contact must send an email to PCAOB registration staff within 60 days of the notice date indicating the firm's desire to remain registered, per CPA Practice Advisor.
SOURCES
Where this comes from
Every posting on the board is verified live.
GO DEEPER
Go deeper
IN THIS SERIES
Previously: PCAOB proposed amendments to AS 6101: comfort letters and negative assurance
A living page: it is re-read and updated as coverage arrives; last updated Monday November 9. Facts come from the linked sources; confirm against the issuer's own text before relying on it.
Audit Friendly's flagship weekly for the people who run the close: the tools, the workflows, what the roles pay and who is hiring.
Accounting Stack · Audit Friendly Data · Accounting & Finance Jobs
Audit Friendly · members.auditfriendly.co