

[Federal Register: December 8, 2006 (Volume 71, Number 236)]
[Notices]               
[Page 71200-71201]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08de06-140]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Securities Act of 1933, Release No. 8757/ December 4, 2006; Securities 
Exchange Act of 1934, Release No. 54865/ December 4, 2006]

 
Order Approving Public Company Accounting Oversight Board Budget 
and Annual Accounting Support Fee for Calendar Year 2007

    The Sarbanes-Oxley Act of 2002 (the ``Act'') established the Public 
Company Accounting Oversight Board (``PCAOB'') to oversee the audits of 
public companies and related matters, to protect investors, and to 
further the public interest in the preparation of informative, accurate 
and independent audit reports. The PCAOB is to accomplish these goals 
through registration of public accounting firms and standard setting, 
inspection, and disciplinary programs. Section 109 of the Act provides 
that the PCAOB shall establish a reasonable annual accounting support 
fee, as may be necessary or appropriate to establish and maintain the 
PCAOB. Section 109(h) amends Section 13(b)(2) of the Securities 
Exchange Act of 1934 to require issuers to pay the allocable share of a 
reasonable annual accounting support fee or fees, determined in 
accordance with Section 109 of the Act. Under Section 109(f), the 
aggregate annual accounting support fee shall not exceed the PCAOB's 
aggregate ``recoverable budget expenses,'' which may include operating, 
capital and accrued items. Section 109(b) of the Act directs the PCAOB 
to establish a budget for each fiscal year in accordance with the 
PCAOB's internal procedures, subject to approval by the Securities and 
Exchange Commission (the ``Commission'').
    On July 18, 2006, the Commission amended its Rules of Practice 
related to its Informal and Other Procedures to add a rule that 
facilitates the Commission's review and approval of PCAOB budgets and 
accounting support fees.\1\ The new budget rule provides, among other 
things, a timetable for the preparation and submission of the PCAOB 
budget and for Commission actions related to each budget, a description 
of the information that should be included in each budget submission, 
limits on the PCAOB's ability to incur expenses and obligations except 
as provided in the approved budget, procedures relating to supplemental 
budget requests, requirements for the PCAOB to furnish on a quarterly 
basis certain budget-related information, and a list of definitions 
that apply to the rule and to general discussions of PCAOB budget 
matters.
---------------------------------------------------------------------------

    \1\ 17 CFR 202.11. See Release No. 33-8724 (July 18, 2006) [71 
FR 41998 (July 24, 2006)].
---------------------------------------------------------------------------

    Although the new budget rule will not take effect until the budget 
process for fiscal year 2008, the PCAOB staff and the Commission staff 
used their best efforts to substantially comply with the timetable and 
other requirements in the new rule for the PCAOB budget submission for 
2007. Accordingly, in March 2006 the PCAOB provided the Commission with 
a narrative description of its program issues and outlook for the 2007 
budget year, and in April the Commission staff provided to the PCAOB 
staff economic assumptions and budgetary guidance for the 2007 budget 
year. The PCAOB subsequently delivered a preliminary budget and budget 
justification to the Commission. The staff from the Commission's 
Offices of the Chief Accountant, Executive Director and Information 
Technology dedicated a substantial amount of time to the review and 
analysis of the PCAOB's programs, projects and budget estimates, 
reviewed the PCAOB's estimates of 2006 actual spending, and attended 
several meetings with management and staff of the PCAOB to develop an 
understanding of the PCAOB's budget and operations. During the course 
of the Commission's review, the Commission staff relied upon 
representations and supporting documentation from the PCAOB. Also, 
substantially as provided in the new rule, there was a ``pass back'' 
from the Commission to the PCAOB. The PCAOB approved its 2007 budget on 
November 30, 2006 and submitted that budget for Commission approval.
    After considering the above, the Commission did not identify any 
proposed disbursements in the 2007 budget adopted by the PCAOB that are 
not properly recoverable through the annual accounting support fee, and 
the Commission believes that the aggregate proposed 2007 annual 
accounting support fee does not exceed the PCAOB's aggregate 
recoverable budget expenses for 2007.
    As part of its review of the 2007 PCAOB budget, the Commission 
notes that the PCAOB has reaffirmed its commitments, among other 
things, to build upon its 2007 goals and objectives to develop a 
comprehensive multi-year strategic plan that is integrated with the 
PCAOB budget process; to have the auditors of its 2007 annual financial 
statements opine on the PCAOB's internal control over financial 
reporting; to devote staff resources to train both PCAOB staff and the 
public on revisions to the standard for auditing internal control over 
financial reporting; and to comply with the new Commission rule related 
to the PCAOB budget approval process in connection with its budget for 
2008. The Commission also recognizes that the PCAOB, upon the arrival 
of Chairman Olson in mid 2006, appropriately has undertaken reviews in 
a number areas, including its compensation, recruiting and information 
technology programs. Because of the potential significance of those 
reviews, during 2007 the PCAOB

[[Page 71201]]

should supplement the quarterly reports made available to the 
Commission under the new budget rule with periodic reports on the 
progress and results of those reviews and with monthly reports showing 
variances of actual or estimated expenditures from budgeted amounts, to 
the extent such progress reports and monthly reports are prepared for 
internal purposes.
    Based on the foregoing, the Commission has determined that the 
PCAOB's 2007 budget and annual accounting support fee are consistent 
with Section 109 of the Act. Accordingly,
    It is ordered, pursuant to Section 109 of the Act, that the PCAOB 
budget and annual accounting support fee for calendar year 2007 are 
approved.

    By the Commission.
Nancy M. Morris,
Secretary.
[FR Doc. E6-20878 Filed 12-7-06; 8:45 am]

BILLING CODE 8011-01-P
