
[Federal Register: June 18, 2009 (Volume 74, Number 116)]
[Notices]               
[Page 29091-29110]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18jn09-71]                         


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Part III





Securities and Exchange Commission





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Public Company Accounting Oversight Board; Notice of Filing of Proposed 
Rules on Annual and Special Reporting by Registered Public Accounting 
Firms; Notice


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60107; File No. PCAOB-2008-04]

 
Public Company Accounting Oversight Board; Notice of Filing of 
Proposed Rules on Annual and Special Reporting by Registered Public 
Accounting Firms

June 12, 2009.

    Pursuant to Section 107(b) of the Sarbanes-Oxley Act of 2002 (the 
``Act''), notice is hereby given that on June 10, 2008, the Public 
Company Accounting Oversight Board (the ``Board'' or ``PCAOB'') filed 
with the Securities and Exchange Commission (the ``Commission'' or 
``SEC'') the proposed rules described in Items I and II below, which 
items have been prepared by the Board. The Commission is publishing 
this notice to solicit comments on the proposed rules from interested 
persons.

I. Board's Statement of the Terms of Substance of the Proposed Rule

    On June 10, 2008, the Board adopted rules consisting of eight new 
rules (PCAOB Rules 2200-2207) concerning annual and special reporting 
by registered public accounting firms, instructions to two forms to be 
used for such reporting (Form 2 and Form 3), and related amendments to 
existing Board Rules. The proposed rules text is set out below.

Section 2. Registration and Reporting

Part 2--Reporting

2200. Annual Report
    Each registered public accounting firm must file with the Board an 
annual report on Form 2 by following the instructions to that form. 
Unless directed otherwise by the Board, the registered public 
accounting firm must file such annual report and exhibits thereto 
electronically with the Board through the Board's Web-based system.
2201. Time for Filing of Annual Report
    Each registered public accounting firm must file the annual report 
on Form 2 no later than June 30 of each year, provided, however, that a 
registered public accounting firm that has its application for 
registration approved by the Board in the period between and including 
April 1 and June 30 of any year shall not be required to file an annual 
report in that year.

    Note: Pursuant to Rule 1002, in any year in which the filing 
deadline falls on a Saturday, Sunday, or federal legal holiday, the 
deadline for filing the annual report shall be the next day that is 
not a Saturday, Sunday, or federal legal holiday.

2202. Annual Fee
    Each registered public accounting firm must pay an annual fee to 
the Board on or before July 31 of any year in which the firm is 
required to file an annual report on Form 2. The Board will, from time 
to time, announce the current annual fee. No portion of the annual fee 
is refundable.
2203. Special Reports
    (a) A registered public accounting firm must file a special report 
on Form 3 to report information to the Board as follows--
    (1) Upon the occurrence, on or after [effective date of this rule], 
of any event specified in Form 3, a registered public accounting firm 
must report the event in a special report filed no later than thirty 
days after the occurrence of the event;
    (2) No later than thirty days after receiving notice of Board 
approval of its application for registration, a registered public 
accounting firm that becomes registered after [effective date of this 
rule] must file a special report to report any event specified in Form 
3 that occurred after the date used by the firm for purposes of General 
Instruction 9 to Form 1 and before the date that the Board approved the 
firm's registration; and
    (3) No later than [date thirty days after the effective date of 
this rule], a registered public accounting firm that is registered as 
of [effective date of this rule], must file a special report to report, 
to the extent applicable to the firm, certain information described in 
General Instruction 4 to Form 3 and current as of [effective date of 
this rule].
    (b) A registered public accounting firm required to file a special 
report shall do so by filing with the Board a special report on Form 3 
in accordance with the instructions to that form. Unless directed 
otherwise by the Board, a registered public accounting firm must file 
such special report and exhibits thereto electronically with the Board 
through the Board's Web-based system.
2204. Signatures
    Each signatory to a report on Form 2 or Form 3 shall manually sign 
a signature page or other document authenticating, acknowledging or 
otherwise adopting his or her signature that appears in typed form 
within the electronic submission. Such document shall be executed 
before or at the time the electronic submission is made and shall be 
retained by the filer for a period of seven years. Upon request, an 
electronic filer shall provide to the Board or its staff a copy of all 
documents retained pursuant to this Rule.
2205. Amendments
    Amendments to a filed report on Form 2 or Form 3 shall be made by 
filing an amended report on Form 2 or Form 3 in accordance with the 
instructions to those forms concerning amendments. Amendments shall not 
be filed to update information in a report that was correct at the time 
the report was filed, but only to correct information that was 
incorrect at the time the report was filed or to provide information 
that was omitted from the report and was required to be provided at the 
time the report was filed.
2206. Date of Filing
    (a) An annual report shall be deemed to be filed on the date on 
which the registered public accounting firm submits a Form 2 in 
accordance with Rule 2200 that includes the signed certification 
required in Part X of Form 2.
    (b) A special report on Form 3 shall be deemed to be filed on the 
date that the registered public accounting firm submits a Form 3 in 
accordance with Rule 2203 that includes the signed certification 
required in Part VIII of Form 3.
2207. Assertions of Conflicts With Non-U.S. Laws
    If, in a report on Form 2 or Form 3, a foreign registered public 
accounting firm omits any information or affirmation required by the 
instructions to the relevant form on the ground that it cannot provide 
such information or affirmation on the form filed with the Board 
without violating non-U.S. law, the foreign registered public 
accounting firm shall--
    (a) In accordance with the instructions to the form--
    (1) Indicate that it has omitted required information or 
affirmations on the ground that it cannot provide such information or 
affirmations on the form filed with the Board without violating non-
U.S. law;
    (2) Identify all Items on the form with respect to which it has 
withheld any required information or affirmation on that ground; and
    (3) Represent that, with respect to all such omitted information or 
affirmations, the foreign registered public accounting firm has 
satisfied the requirements of paragraph (b) of this Rule and has in its 
possession the materials required by paragraph (c) of this Rule;

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    (b) Before filing the form with the Board, make reasonable, good 
faith efforts, where not prohibited by law, to seek any consents or 
waivers that would be sufficient to allow it to provide the required 
information or affirmation on the form filed with the Board without 
violating non-U.S. law;
    (c) Have in its possession, before the date on which the foreign 
registered public accounting firm files the form with the Board and for 
a period of seven years thereafter--
    (1) An electronic version of the form that includes all information 
required by the instructions to the form (including certification and 
signature) and a manually signed signature page or other document that 
would satisfy the requirement of Rule 2204 if that version of the form 
were filed with the Board;
    (2) A copy of the provisions of non-U.S. law that the foreign 
registered public accounting firm asserts prohibit it from providing 
the required information or affirmations on the form filed with the 
Board, and an English translation of any such provisions that are not 
in English;
    (3) A legal opinion, in English, addressed to the foreign 
registered public accounting firm and that the foreign registered 
public accounting firm has reason to believe is current with respect to 
the relevant point of law, that the firm cannot provide the omitted 
information or affirmation on the form filed with the Board without 
violating non-U.S. law;
    (4) A written representation, in English, that the Firm has made 
reasonable efforts, and a written description of those efforts, to 
obtain consents or waivers that would be sufficient to allow it to 
provide the required information or affirmation on the form filed with 
the Board, manually signed by the same person whose signature appears 
in the certification portion of the form, and indicating that the 
signer has reviewed the description and that the description is, based 
on the signer's knowledge, accurate and does not contain any untrue 
statements of material fact or omit to state a material fact necessary 
to make the statements made not misleading, and dated--
    (i) For Form 2, after the end of the reporting period and no later 
than the date of the Form 2 filing; and
    (ii) For Form 3, after the date of the reportable event and no 
later than the date of the Form 3 filing;
    (d) Not later than the fourteenth day after any request by the 
Board or by the Director of the Division of Registration and 
Inspections for any of the documents described in subparagraphs (2)-(4) 
of paragraph (c) of this Rule, file an amended report on Form 2 or Form 
3 including, as an exhibit to the amended report, the requested 
documents; and
    (e) Not later than the fourteenth day after any request by the 
Board for any of the information included in the document described in 
subparagraph (1) of paragraph (c) of this Rule, file an amended report 
on Form 2 or Form 3 including the requested information.

    Note: Rule 2207(c)(1) does not require that the version of the 
form maintained by the firm include any affirmation required by Part 
IX of Form 2. If the firm withholds any such affirmation, however, 
the asserted legal conflict must be addressed in accordance with 
subparagraphs (2)-(4) of Rule 2207(c).


    Note: Rule 2207(c)(1) does not require a firm to include on the 
form maintained by the firm any information (1) that the firm does 
not possess, and (2) as to which the firm asserts that the firm 
would violate non-U.S. law by requiring another person to provide 
the information to the firm. The asserted legal conflict that 
prevents the firm from requiring another person to provide the 
information to the firm, however, must be addressed in accordance 
with subparagraphs (2)-(4) of Rule 2207(c).


    Note: The ``reasonable efforts'' element of Rule 2207(c)(4) does 
not require a firm to renew efforts to seek consents or waivers from 
parties who have previously declined to provide consents or waivers 
with respect to disclosure of similar types of information and does 
not require a firm to seek consents or waivers from parties other 
than firm personnel and firm clients.

Forms

Form 2--Annual Report Form

General Instructions
    1. Submission of this Report. A registered public accounting firm 
must use this Form to file with the Board the annual report required by 
Section 102(d) of the Act and Rule 2200 and to file any amendments to 
an annual report. Unless otherwise directed by the Board, the Firm must 
file this Form, and all exhibits to this Form, electronically with the 
Board through the Board's Web-based system.
    2. Defined Terms. The definitions in the Board's rules apply to 
this Form. Italicized terms in the instructions to this Form are 
defined in the Board's rules. In addition, as used in the instructions 
to this Form, the term ``the Firm'' means the registered public 
accounting firm that is filing this Form with the Board.
    3. When Report is Considered Filed. Annual reports on this Form are 
required to be filed each year on or before June 30, subject to the 
qualification in Rule 2201 concerning any firm that has its application 
for registration approved by the Board in the period between and 
including April 1 and June 30. An annual report is considered filed 
when the Firm has submitted to the Board a Form 2 in accordance with 
Rule 2200 that includes the signed certification required in Part X of 
Form 2.
    4. Period Covered by this Report. Annual reports on this Form shall 
cover a 12-month period from April 1 to March 31, subject to the 
qualification in Part VIII of Form 2 relating to the first annual 
report filed by a firm that becomes registered after [effective date of 
Rule 2201]. In the instructions to this Form, this is the period 
referred to as the ``reporting period.''
    5. Amendments to this Report. Amendments shall not be filed to 
update information in a filed Form 2 that was correct at the time the 
Form was filed, but only to correct information that was incorrect at 
the time the Form was filed or to provide information that was omitted 
from the Form and was required to be provided at the time the Form was 
filed. When filing a Form 2 to amend an earlier filed Form 2, the Firm 
must supply not only the corrected or supplemental information, but 
must include in the amended Form 2 all information, affirmations, and 
certifications that were required to be included in the original Form 
2. The Firm may access the originally filed Form 2 through the Board's 
Web-based system and make the appropriate amendments without needing to 
re-enter all other information.

    Note: The Board will designate an amendment to an annual report 
as a report on ``Form 2/A.''

    6. Rules Governing this Report. In addition to these instructions, 
the rules contained in Part 2 of Section 2 of the Board's rules govern 
this Form. Please read these rules and the instructions carefully 
before completing this Form.
    7. Requests for Confidential Treatment. The Firm may, by marking 
the Form in accordance with the instructions provided, request 
confidential treatment of any information submitted in Part VI, Part 
VII, or Exhibit 99.3 of this Form that has not otherwise been publicly 
disclosed and that either contains information reasonably identified by 
the Firm as proprietary information or that is protected from public 
disclosure by applicable laws related to confidentiality of 
proprietary, personal, or other information. See Rule 2300. Foreign 
registered public accounting firm's may also request confidential

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treatment for Item 3.2 and Exhibit 3.2, though U.S. firms may not do 
so. If the Firm requests confidential treatment, it must identify the 
information in Part VI, Part VII, or Exhibit 99.3 (or, for a foreign 
registered public accounting firm, Item 3.2 and Exhibit 3.2) that it 
desires to keep confidential, and include, as Exhibit 99.1 to this 
Form, an exhibit that complies with the requirements of Rule 
2300(c)(2). The Board will determine whether to grant confidential 
treatment requests on a case-by-case basis. If the Firm fails to 
include Exhibit 99.1, or includes an Exhibit 99.1 that fails to comply 
with Rule 2300(c)(2), the request for confidential treatment may be 
denied solely on the basis of that failure.
    8. Assertions of Conflicts with Non-U.S. Law. If the Firm is a 
foreign registered public accounting firm, the Firm may, unless 
otherwise directed by the Board pursuant to Rule 2207(e), decline to 
provide certain information and affirmations required by this Form if 
the Firm could not provide such information or affirmations without 
violating non-U.S. law and the Firm proceeds in accordance with Rule 
2207. The Firm may withhold responsive information and affirmations on 
that basis from any Part of the Form other than Parts I, II, and X and 
Items 3.1.a, 3.1.b, 3.1.d, and 4.1. If the firm withholds responsive 
information or affirmations, the Firm must indicate, in accordance with 
the instructions in the relevant Part of the Form, the particular Items 
with respect to which the Firm has withheld responsive information or a 
required affirmation. The Firm may not use the Form to make any general 
assertion that a particular requirement may conflict with non-U.S. law, 
but only to indicate that, on the basis of an asserted conflict, the 
Firm has in fact withheld from this Form required information or a 
required affirmation.
    9. Language. Information submitted as part of this Form, including 
any exhibit to this Form, must be in the English language.

Part I--Identity of the Firm and Contact Persons

    In Part I, the Firm should provide information that is current as 
of the date of the certification in Part X.

Item 1.1 Name of the Firm

    a. State the legal name of the Firm.
    b. If different than its legal name, state the name or names under 
which the Firm issues audit reports, or issued any audit report during 
the reporting period.
    c. If the Firm's legal name at the beginning of the reporting 
period was different than the name provided under Item 1.1.a, state 
that legal name and any other legal name the Firm had during the 
reporting period. Include the legal name of any registered public 
accounting firm that merged into, or was acquired by, the Firm during 
the reporting period.

Item 1.2 Contact Information of the Firm

    a. State the physical address (and, if different, mailing address) 
of the Firm's headquarters office.
    b. State the telephone number and facsimile number of the Firm's 
headquarters office. If available, state the Web site address of the 
Firm.

Item 1.3 Primary Contact With the Board

    State the name, business title, physical business address (and, if 
different, business mailing address), business telephone number, 
business facsimile number, and business e-mail address of a partner or 
authorized officer of the Firm who will serve as the Firm's primary 
contact with the Board, including for purposes of the annual report 
filed on this Form and any special reports filed on Form 3.

Part II--General Information Concerning This Report

Item 2.1 Reporting Period

    State the reporting period covered by this report.

    Note: The reporting period, which the Firm should enter in Item 
2.1, is the period beginning on April 1 of the year before the year 
in which the annual report is required to be filed and ending March 
31 of the year in which the annual report is required to be filed. 
That is the period referred to where this Form refers to the 
``reporting period.'' Note, however, the special instruction at the 
beginning of Part VIII concerning the first annual report filed by 
certain firms.

Item 2.2 Amendments

    If this is an amendment to a report previously filed with the 
Board--
    a. Indicate, by checking the box corresponding to this item, that 
this is an amendment.
    b. Identify the specific Item numbers of this Form (other than this 
Item 2.2) as to which the Firm's response has changed from that 
provided in the most recent Form 2 or amended Form 2 filed by the Firm 
with respect to the reporting period.

Part III--General Information Concerning the Firm

Item 3.1 The Firm's Practice Related to the Registration Requirement

    a. Indicate whether the Firm issued any audit report with respect 
to an issuer during the reporting period.
    b. In the event of an affirmative response to Item 3.1.a, indicate 
whether the issuers with respect to which the Firm issued audit reports 
during the reporting period were limited to employee benefit plans that 
file reports with the Commission on Form 11-K.
    c. In the event of a negative response to Item 3.1.a, indicate 
whether the Firm played a substantial role in the preparation or 
furnishing of an audit report with respect to an issuer during the 
reporting period.
    d. In the event of a negative response to both Items 3.1.a and 
3.1.c, indicate whether, during the reporting period, the Firm issued 
any document with respect to financial statements of a non-issuer 
broker-dealer in which the Firm either set forth an opinion on the 
financial statements or asserted that no such opinion can be expressed.

Item 3.2 Fees Billed to Issuer Audit Clients

    a. Of the total fees billed by the Firm to all clients for services 
that were rendered in the reporting period, state the percentage (which 
may be rounded, but no less specifically than to the nearest five 
percent) attributable to fees billed to issuer audit clients for--
    1. Audit services;
    2. Other accounting services;
    3. Tax services; and
    4. Non-audit services.
    b. Indicate, by checking the appropriate box, which of the 
following two methods the Firm used to calculate the percentages 
reported in Item 3.2.a--
    1. The Firm used as a denominator the total fees billed to all 
clients for services rendered during the reporting period and used as 
numerators (for each of the four categories) total fees billed to 
issuer audit clients for the relevant services rendered during the 
reporting period.
    2. The Firm used as a denominator the total fees billed to all 
clients in the Firm's fiscal year that ended during the reporting 
period and used as numerators (for each of the four categories) total 
issuer audit client fees as determined by reference to the fee amounts 
disclosed to the Commission by those clients for each client's fiscal 
year that ended during the reporting period (including, for clients who 
have not made the required Commission filings, the fee amounts required 
to be disclosed).

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    c. If the Firm has used a reasonable method to estimate the 
components of the calculations described in Item 3.2.b, rather than 
using the specific data, check this box and attach Exhibit 3.2 briefly 
describing the reasons for doing so and the methodology used in making 
those estimates.

    Note: In responding to Item 3.2, careful attention should be 
paid to the definitions of the italicized terms, which are found in 
Board Rules 1001(i)(iii) (issuer), 1001(a)(v) (audit), 1001(a)(vii) 
(audit services), 1001(o)(i) (other accounting services), 1001(t)(i) 
(tax services), and 1001(n)(ii) (non-audit services). The 
definitions of the four categories of services correspond to the 
Commission's descriptions of the services for which an issuer must 
disclose fees paid to its auditor. Compare the descriptions of 
services in Item 9(e) of Commission Schedule 14A (17 CFR Sec.  
240.14a-101) under the headings ``Audit Fees,'' ``Audit-Related 
Fees,'' ``Tax Fees,'' and ``All Other Fees'' with, respectively, the 
Board's definitions of Audit Services, Other Accounting Services, 
Tax Services, and Non-Audit Services.

Part IV--Audit Clients and Audit Reports

Item 4.1 Audit Reports Issued by the Firm

    a. Provide the following information concerning each issuer for 
which the Firm issued any audit report(s) during the reporting period--
    1. The issuer's name;
    2. The issuer's CIK number, if any; and
    3. The date(s) of the audit report(s).
    b. If the Firm identified any issuers in response to Item 4.1.a., 
indicate, by checking the box corresponding to the appropriate range 
set out below, the total number of Firm personnel who exercised the 
authority to sign the Firm's name to an audit report during the 
reporting period. If the Firm checks the box indicating that the number 
is in the range of 1-9, provide the exact number.
    1-9
    10-25
    26-50
    51-100
    101-200
    More than 200

    Note: In responding to Item 4.1, careful attention should be 
paid to the definition of audit report, which is found in Rule 
1001(a)(vi) of the Board's Rules, and which does not encompass 
reports prepared for entities that are not issuers, as that term is 
defined in Rule 1001(i)(iii). Careful attention should also be paid 
to the definition of issuer. The Firm should not, for example, 
overlook the fact that investment companies may be issuers, or that 
employee benefit plans that file reports on Commission Form 11-K are 
issuers.


    Note:  In responding to Item 4.1, do not list any issuer more 
than once. For each issuer, provide in Item 4.1.a.3 the audit report 
dates (as described in AU 530, Dating of the Independent Auditor's 
Report) of all such audit reports for that issuer, including each 
date of any dual-dated audit report.


    Note: Note: In responding to Item 4.1.a.3, it is not necessary 
to provide the date of any consent to an issuer's use of an audit 
report previously issued for that issuer, except that, if such 
consents constitute the only instances of the Firm issuing audit 
reports for a particular issuer during the reporting period, the 
Firm should include that issuer in Item 4.1 and include the dates of 
such consents in Item 4.1.a.3.

Item 4.2 Audit Reports With Respect to Which the Firm Played a 
Substantial Role During the Reporting Period

    a. If no issuers are identified in response to Item 4.1.a, but the 
Firm played a substantial role in the preparation or furnishing of an 
audit report that was issued during the reporting period, provide the 
following information concerning each issuer with respect to which the 
Firm did so--
    1. The issuer's name;
    2. The issuer's CIK number, if any;
    3. The name of the registered public accounting firm that issued 
the audit report(s);
    4. The end date(s) of the fiscal period(s) covered by the financial 
statements that were the subject of the audit report(s); and
    5. A description of the substantial role played by the Firm with 
respect to the audit report(s).

    Note:  If the Firm identifies any issuer in response to Item 
4.1, the Firm need not respond to Item 4.2.


    Note: In responding to Item 4.2, do not list any issuer more 
than once.

Part V--Offices and Affiliations

    In Part V, the Firm should provide information that is current as 
of the last day of the reporting period.

Item 5.1 Firm's Offices

    List the physical address and, if different, the mailing address, 
of each of the Firm's offices.

Item 5.2 Audit-related Memberships, Affiliations, or Similar 
Arrangements

    a. State whether the Firm has any:
    1. Membership or affiliation in or with any network, arrangement, 
alliance, partnership or association that licenses or authorizes audit 
procedures or manuals or related materials, or the use of a name in 
connection with the provision of audit services or accounting services;
    2. Membership or affiliation in or with any network, arrangement, 
alliance, partnership or association that markets or sells audit 
services or through which joint audits are conducted; or
    3. Arrangement, whether by contract or otherwise, with another 
entity through or from which the Firm employs or leases personnel to 
perform audit services.
    b. If the Firm provides an affirmative response to Item 5.2.a, 
identify, by name and address, the entity with which the Firm has each 
such relationship, and provide a brief description of each such 
relationship.

    Note: Item 5.2.b does not require information concerning every 
other entity that is part of the network, arrangement, alliance, 
partnership or association, but only information concerning the 
network, arrangement, alliance, partnership, or association itself, 
or the principal entity through which it operates.

Part VI--Personnel

    In Part VI, the Firm should provide information that is current as 
of the last day of the reporting period.

Item 6.1 Number of Firm Personnel

    Provide the following numerical totals--
    a. Total number of the Firm's accountants;
    b. Total number of the Firm's certified public accountants (include 
in this number all accountants employed by the Firm with comparable 
licenses from non-U.S. jurisdictions); and
    c. Total number of the Firm's personnel.

Part VII--Certain Relationships

Item 7.1 Individuals With Certain Disciplinary or Other Histories

    a. Other than a relationship required to be reported in Item 4.1 of 
Form 3, and only if the Firm has not previously identified the 
individual and the sanction or Commission order on Form 1, Form 2, or 
Form 3, state whether, as of the end of the reporting period, the Firm 
has any employee, partner, shareholder, principal, member, or owner who 
was the subject of a Board disciplinary sanction or a Commission order 
under Rule 102(e) of the Commission's Rules of Practice, entered within 
the five years preceding the end of the reporting period and without 
that sanction or order having been vacated on review or appeal, and who 
provided at least ten hours of audit services for any issuer during the 
reporting period.
    b. If the Firm provides an affirmative response to Item 7.1.a, 
provide--

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    1. The name of each such individual;
    2. A description of the nature of the relationship;
    3. The date that the Firm entered into the relationship; and
    4. The date of the relevant order and an indication whether it was 
a Board order or a Commission order.

Item 7.2 Entities With Certain Disciplinary or Other Histories

    a. Other than a relationship required to be reported in Item 4.2 of 
Form 3, and only if the Firm has not previously reported the 
information on Form 1, Form 2, or Form 3, state whether, as of the end 
of the reporting period, the Firm was owned or partly owned by an 
entity that was the subject of (a) a Board disciplinary sanction 
entered within the five years preceding the end of the reporting 
period, which has not been vacated on review or appeal, suspending or 
revoking that entity's registration or disapproving that entity's 
application for registration, or (b) a Commission order under Rule 
102(e) of the Commission's Rules of Practice entered within the five 
years preceding the end of the reporting period, which has not been 
vacated on appeal, suspending or denying the privilege of appearing or 
practicing before the Commission.
    b. If the Firm provides an affirmative response to Item 7.2.a, 
provide--
    1. The name of each such entity;
    2. A description of the nature of the relationship;
    3. The date that the Firm entered into the relationship; and
    4. The date of the relevant order and an indication whether it was 
a Board order or a Commission order.

Item 7.3 Certain Arrangements To Receive Consulting or Other 
Professional Services

    a. Other than a relationship required to be reported in Item 4.3 of 
Form 3, state whether the Firm received, or entered into a contractual 
or other arrangement to receive, from any individual or entity meeting 
the criteria described in Items 7.1.a or 7.2.a, consulting or other 
professional services related to the Firm's audit practice or related 
to services the Firm provides to issuer audit clients.
    b. If the Firm provides an affirmative response to Item 7.3.a, 
provide--
    1. The name of each such individual or entity;
    2. A description of the nature of the relationship;
    3. The date that the Firm entered into the relationship;
    4. A description of the services provided or to be provided to the 
Firm by the individual or entity; and
    5. The date of the relevant order and an indication whether it was 
a Board order or a Commission order.

Part VIII--Acquisition of Another Public Accounting Firm or Substantial 
Portions of Another Public Accounting Firm's Personnel

    If the Firm became registered on or after [effective date of Rule 
2201], the first annual report that the Firm files must provide this 
information for the period running from the date used by the Firm for 
purposes of General Instruction 9 of Form 1 (regardless of whether that 
date was before or after the beginning of the reporting period) through 
March 31 of the year in which the annual report is required to be 
filed.

Item 8.1 Acquisition of Another Public Accounting Firm or Substantial 
Portions of Another Public Accounting Firm's Personnel

    a. State whether the Firm acquired another public accounting firm.
    b. If the Firm provides an affirmative response to Item 8.1.a, 
provide the name(s) of the public accounting firm(s) that the Firm 
acquired.
    c. State whether the Firm, without acquiring another public 
accounting firm, took on as employees, partners, shareholders, 
principals, members, or owners 75% or more of the persons who, as of 
the beginning of the reporting period, were the partners, shareholders, 
principals, members, or owners of another public accounting firm.
    d. If the Firm provides an affirmative response to Item 8.1.c, 
provide the name of the other public accounting firm and the number of 
the other public accounting firm's former partners, shareholders, 
principals, members, owners, and accountants that joined the Firm.

Part IX--Affirmation of Consent

Item 9.1 Affirmation of Understanding of, and Compliance With, Consent 
Requirements

    Whether or not the Firm, in applying for registration with the 
Board, provided the signed statement required by Item 8.1 of Form 1, 
affirm that--
    a. The Firm has consented to cooperate in and comply with any 
request for testimony or the production of documents made by the Board 
in furtherance of its authority and responsibilities under the 
Sarbanes-Oxley Act of 2002;
    b. The Firm has secured from each of its associated persons, and 
agrees to enforce as a condition of each such person's continued 
employment by or other association with the Firm, a consent indicating 
that the associated person consents to cooperate in and comply with any 
request for testimony or the production of documents made by the Board 
in furtherance of its authority under the Sarbanes-Oxley Act of 2002, 
and that the associated person understands and agrees that such consent 
is a condition of his or her continued employment by or other 
association with the Firm; and
    c. The Firm understands and agrees that cooperation and compliance, 
as described in Item 9.1.a, and the securing and enforcing of consents 
from its associated persons as described in Item 9.1.b, is a condition 
to the continuing effectiveness of the registration of the Firm with 
the Board.

    Note 1: The affirmation in Item 9.1.b shall not be understood to 
include an affirmation that the Firm has secured such consents from 
any associated person that is a registered public accounting firm.


    Note 2: The affirmation in Item 9.1.b shall not be understood to 
include an affirmation that the Firm has secured such consents from 
any associated person that is a foreign public accounting firm in 
circumstances where that associated person asserts that non-U.S. law 
prohibits it from providing the consent, so long as the Firm 
possesses in its files documents relating to the associated person's 
assertion about non-U.S. law that would be sufficient to satisfy the 
requirements of subparagraphs (2) through (4) of Rule 2207(c) if 
that associated person were a registered public accounting firm 
filing a Form 2 and withholding this affirmation. This exception to 
the affirmation in Item 9.1.b does not relieve the Firm of its 
obligation to enforce cooperation and compliance with Board demands 
by any such associated person as a condition of continued 
association with the Firm.


    Note 3: If the Firm is a foreign registered public accounting 
firm, the affirmations in Item 9.1 that relate to associated persons 
shall be understood to encompass every accountant who is a 
proprietor, partner, principal, shareholder, officer, or audit 
manager of the Firm and who provided at least ten hours of audit 
services for any issuer during the reporting period.

Part X--Certification of the Firm

Item 10.1 Signature of Partner or Authorized Officer

    This Form must be signed on behalf of the Firm by an authorized 
partner or officer of the Firm including, in accordance with Rule 2204, 
both a signature that appears in typed form within the electronic 
submission and a corresponding manual signature retained by the Firm. 
The signer must certify that--
    a. the signer is authorized to sign this Form on behalf of the 
Firm;

[[Page 29097]]

    b. the signer has reviewed this Form;
    c. based on the signer's knowledge, the Firm has filed a special 
report on Form 3 with respect to each event that occurred before the 
end of the reporting period and for which a special report on Form 3 is 
required under the Board's rules;
    d. based on the signer's knowledge, this Form does not contain any 
untrue statement of a material fact or omit to state a material fact 
necessary to make the statements made, in light of the circumstances 
under which such statements were made, not misleading; and
    e. either--
    1. based on the signer's knowledge, the Firm has not failed to 
include in this Form any information or affirmation that is required by 
the instructions to this Form, or
    2. based on the signer's knowledge--
    (A) the Firm is a foreign registered public accounting firm and has 
not failed to include in this Form any information or affirmation that 
is required by the instructions to this Form except for information or 
affirmations that the Firm asserts it cannot provide to the Board on 
this Form 2 without violating non-U.S. law;
    (B) with respect to any such withheld information or affirmation, 
the Firm has satisfied the requirements of PCAOB Rule 2207(b) and has 
in its possession the materials required by PCAOB Rule 2207(c); and
    (C) the Firm has indicated, in accordance with the instructions to 
this Form, each Item of this Form with respect to which the Firm has 
withheld any required information or affirmation.
    The signature must be accompanied by the signer's title, the 
capacity in which the signer signed the Form, the date of signature, 
and the signer's business mailing address, business telephone number, 
business facsimile number, and business e-mail address.

Part XI--Exhibits

    To the extent applicable under the foregoing instructions or the 
Board's rules, each annual report must be accompanied by the following 
exhibits:

Exhibit 3.2 Description of Methodology Used To Estimate Components of 
Calculation in Item 3.2 and Reasons for Using Estimates

Exhibit 99.1 Request for Confidential Treatment

Exhibit 99.3 Materials Required by Rule 2207(c)(2)-(4)--Submit Only as 
an Exhibit to an Amended Form 2 in Response to a Request Made Pursuant 
to Rule 2207(d)

Form 3--Special Report Form

General Instructions
    1. Submission of this Report. Effective [effective date of Rule 
2203], a registered public accounting firm must use this Form to file 
special reports with the Board pursuant to Section 102(d) of the Act 
and Rule 2203 and to file any amendments to a special report. Unless 
otherwise directed by the Board, the Firm must file this Form, and all 
exhibits to this Form, electronically with the Board through the 
Board's Web-based system.
    2. Defined Terms. The definitions in the Board's rules apply to 
this Form. Italicized terms in the instructions to this Form are 
defined in the Board's rules. In addition, as used in the instructions 
to this Form, the term ``the Firm'' means the registered public 
accounting firm that is filing this Form with the Board.
    3. When this Report is Required and When It is Considered Filed. 
Upon the occurrence of any event specified in Part II of this Form, the 
Firm must report the event on this Form by following the instructions 
to this Form. With respect to events that occur on or after [effective 
date of Rule 2203] and while the Firm is registered, the Firm must file 
the Form no later than thirty days after the occurrence of the event 
reported. Certain additional requirements apply, but they vary 
depending on whether a firm was registered as of [effective date of 
Rule 2203]. A firm that becomes registered after [effective date of 
Rule 2203], must, within thirty days of receiving notice of Board 
approval of its registration application, file this Form to report any 
reportable events that occurred in a specified period before approval 
of the firm's application for registration. See Rule 2203(a)(2). A firm 
that was registered as of [effective date of Rule 2203], must, by [date 
30 days after effective date of Rule 2203], file this Form to report 
certain additional information that is current as of [effective date of 
Rule 2203]. See Rule 2203(a)(3) and General Instruction No. 4 below. A 
special report shall be deemed to be filed on the date that the Firm 
submits a Form 3 in accordance with Rule 2203 that includes the signed 
certification required in Part VIII of Form 3.
    4. Required Filing to Bring Current Certain Information for Firms 
Registered as of [effective date of Rule 2203]. If the Firm is 
registered as of [effective date of Rule 2203], the Firm must file a 
special report on this Form no later than [date 30 days after effective 
date of Rule 2203], to report the information specified below, to the 
extent that it has not been reported on the Firm's Form 1 filing. The 
Firm must make this Form 3 filing to report the following information 
even if the Firm has previously informally disclosed the information to 
the Board or its staff--
    a. Information responsive to Items 2.4 through 2.9 and Item 4.1 if 
(1) the proceeding is pending as of [effective date of Rule 2203], and 
(2) the defendants or respondents as of that date include either the 
Firm or a person who is a partner, shareholder, principal, owner, 
member, or audit manager of the Firm as of that date;
    b. Information responsive to Items 2.10 and 4.2 if (1) the 
conclusion of a proceeding as to any party specified there occurred 
after the date used by the firm for purposes of General Instruction 9 
to Form 1 and before [effective date of Rule 2203], and (2) the 
proceeding resulted in any conviction of, judgment against, imposition 
of any liability or sanction on, or Commission Rule 102(e) order 
against the Firm or any person who is a partner, shareholder, 
principal, owner, member, or audit manager of the Firm as of [effective 
date of Rule 2203];
    c. Information responsive to Items 2.11 and 4.3 if the Firm is the 
subject of a petition or proceeding described there as of [effective 
date of Rule 2203];
    d. Information responsive to Items 2.12 through 2.14 and Part V if 
(1) the relationship commenced after the date used by the firm for 
purposes of General Instruction 9 to Form 1, (2) the specified 
disciplinary sanction or Commission Rule 102(e) order continued to be 
in effect as of [effective date of Rule 2203], and (3) the specified 
relationship continues to exist as of [effective date of Rule 2203];
    e. Information responsive to Items 2.15 and 6.1 if (1) the loss of 
authorization relates to a jurisdiction or authority identified in Item 
1.7 of the Firm's Form 1 and, (2) as of [effective date of Rule 2203], 
the Firm continues to lack the specified authorization in that 
jurisdiction;
    f. Information responsive to Items 2.16 and 6.2 if the license or 
certification is in effect as of [effective date of Rule 2203]; and

[[Page 29098]]

    g. Information responsive to Items 2.17 and 2.18 and Part VII that 
is current as of [effective date of Rule 2203] to the extent that it 
differs from the corresponding information provided on the Firm's Form 
1.
    5. Completing the Form. A firm filing this Form must always 
complete Parts I, II, and VIII of this Form. Parts III through VII 
should be completed to the extent applicable, as described more fully 
in the instructions to Part II of the Form.
    6. Amendments to this Report. Amendments shall not be filed to 
update information in a filed Form 3 that was correct at the time the 
Form was filed, but only to correct information that was incorrect at 
the time the Form was filed or to provide information that was omitted 
from the Form and was required to be provided at the time the Form was 
filed. When filing a Form 3 to amend an earlier filed Form 3, the Firm 
must supply not only the corrected or supplemental information, but 
must include in the amended Form 3 all information, affirmations, and 
certifications that were required to be included in the original Form 
3. The Firm may access the originally filed Form 3 through the Board's 
Web-based system and make the appropriate amendments without needing to 
re-enter all other information.

    Note: The Board will designate an amendment to a special report 
as a report on ``Form 3/A.''

    7. Rules Governing this Report. In addition to these instructions, 
the rules contained in Part 2 of Section 2 of the Board's rules govern 
this Form. Please read these rules and the instructions carefully 
before completing this Form.
    8. Requests for Confidential Treatment. The Firm may, by marking 
the Form in accordance with the instructions provided, request 
confidential treatment of any information submitted in Item 3.1.c, Part 
IV, Part V, Item 6.1.d, Item 7.1.d, or Exhibit 99.3 of this Form that 
has not otherwise been publicly disclosed and that either contains 
information reasonably identified by the Firm as proprietary 
information or that is protected from public disclosure by applicable 
laws related to confidentiality of proprietary, personal, or other 
information. See Rule 2300. If the Firm requests confidential 
treatment, it must identify the information in Item 3.1.c, Part IV, 
Part V, Item 6.1.d, Item 7.1.d, or Exhibit 99.3 that it desires to keep 
confidential, and include, as Exhibit 99.1 to this Form, an exhibit 
that complies with the requirements of Rule 2300(c)(2). The Board will 
determine whether to grant confidential treatment requests on a case-
by-case basis. If the Firm fails to include Exhibit 99.1, or includes 
an Exhibit 99.1 that fails to comply with Rule 2300(c)(2), the request 
for confidential treatment may be denied solely on the basis of that 
failure.
    9. Assertions of Conflicts with Non-U.S. Law. If the Firm is a 
foreign registered public accounting firm, the Firm may, unless 
otherwise directed by the Board pursuant to Rule 2207(e), decline to 
provide certain information required by this Form if the Firm could not 
provide such information without violating non-U.S. law and the Firm 
proceeds in accordance with Rule 2207. The Firm may withhold responsive 
information on that basis from any Part of the Form other than Parts I, 
II, and VIII, and Items 7.1.a, 7.1.b, 7.1.c, and 7.2. If the firm 
withholds responsive information, the Firm must indicate, in accordance 
with the instructions in the relevant Part of the Form, the particular 
Items with respect to which the Firm has withheld responsive 
information. The Firm may not use the Form to make any general 
assertion that a particular requirement may conflict with non-U.S. law, 
but only to indicate that, on the basis of an asserted conflict, the 
Firm has in fact withheld from this Form required information.
    10. Language. Information submitted as part of this Form, including 
any exhibit to this Form, must be in the English language.

Part I--Identity of the Firm

Item 1.1 Name of Firm

    a. State the legal name of the Firm.

    Note:  If the Firm is filing this Form 3 to report that the 
Firm's legal name has changed, the name entered in Item 1.1.a should 
be the Firm's legal name before the name change that is being 
reported. The Firm's new name should be included in the response to 
Item 1.1.c.

    b. If different than its legal name, state the name or names under 
which the Firm issues audit reports.
    c. If the Firm is filing this Form 3 to report that the Firm's 
legal name has changed, state the new legal name of the Firm.

Part II--Reason for Filing This Report

    Indicate, by checking the relevant box(es) from among Items 2.1 
through 2.18 below, the event(s) being reported on this Form. More than 
one event may be reported in the same Form 3 filing. For each event 
indicated below, proceed to the Parts and Items of this Form indicated 
parenthetically for the specific event being reported and provide the 
information therein described. Provide responses only to those Parts 
and Items of the Form specifically indicated for the event or events 
that the Firm identifies in this Part II as an event being reported on 
this Form. (For example, if the Form is being filed solely to report 
that the Firm has changed its name, check the box for Item 2.17 in this 
Part of the Form, and complete only Item 7.1 and Part VIII of the 
Form.) If the Firm is filing this Form to amend a previous filing, the 
Firm also should complete Item 2.19.

    Note:  In Items 2.4 through 2.11 and Item 2.15, the reportable 
event is described in terms of whether the Firm ``has become aware'' 
of certain facts. For these purposes, the Firm is deemed to have 
become aware of the relevant facts on the date that any partner, 
shareholder, principal, owner, or member of the Firm first becomes 
aware of the facts.

Audit Reports

Item 2.1 The Firm has withdrawn an audit report on financial 
statements, or withdrawn its consent to the use of its name in a 
report, document, or written communication containing an issuer's 
financial statements, and the issuer has failed to comply with a 
Commission requirement to make a report concerning the matter pursuant 
to Item 4.02 of Commission Form 8-K. (Complete Item 3.1 and Part VIII.)
Item 2.2 The Firm has issued audit reports with respect to more than 
100 issuers in a calendar year immediately following a calendar year in 
which the Firm did not issue audit reports with respect to more than 
100 issuers. (Complete Part VIII.)
Item 2.3 The Firm has issued audit reports with respect to 100 or fewer 
issuers in a completed calendar year immediately following a calendar 
year in which the Firm issued audit reports with respect to more than 
100 issuers. (Complete Part VIII.)
Certain Legal Proceedings
Item 2.4 The Firm has become aware that the Firm has become a defendant 
in a criminal proceeding prosecuted by a governmental criminal law 
enforcement authority. (Complete Item 4.1 and Part VIII.)
Item 2.5 The Firm has become aware that, in a matter arising out of his 
or her conduct in the course of providing audit services or other 
accounting services to an issuer, a partner, shareholder, principal,

[[Page 29099]]

owner, member, or audit manager of the Firm has become a defendant in a 
criminal proceeding prosecuted by a governmental criminal law 
enforcement authority. (Complete Item 4.1 and Part VIII.)
Item 2.6 The Firm has become aware that a partner, shareholder, 
principal, owner, member, or audit manager of the Firm who provided at 
least ten hours of audit services for any issuer during the Firm's 
current fiscal year or its most recently completed fiscal year has 
become a defendant in a criminal proceeding prosecuted by a 
governmental criminal law enforcement authority and is charged with 
fraud, embezzlement, forgery, extortion, bribery, obstruction of 
justice, perjury, or false statements; or charged with any crime 
arising out of alleged conduct relating to accounting, auditing, 
securities, banking, commodities, taxation, consumer protection, or 
insurance. (Complete Item 4.1 and Part VIII.)
Item 2.7 The Firm has become aware that, in a matter arising out of the 
Firm's conduct in the course of providing professional services for a 
client, the Firm has become a defendant or respondent in a civil or 
alternative dispute resolution proceeding initiated by a governmental 
entity or in an administrative or disciplinary proceeding other than a 
Board disciplinary proceeding. (Complete Item 4.1 and Part VIII.)
Item 2.8 The Firm has become aware that, in a matter arising out of his 
or her conduct in the course of providing audit services or other 
accounting services to an issuer, a partner, shareholder, principal, 
owner, member, or audit manager of the Firm has become a defendant or 
respondent in a civil or alternative dispute resolution proceeding 
initiated by a governmental entity or in an administrative or 
disciplinary proceeding other than a Board disciplinary proceeding. 
(Complete Item 4.1 and Part VIII.)
Item 2.9 The Firm has become aware that, in a matter arising out of his 
or her conduct in the course of providing professional services for a 
client, a partner, shareholder, principal, owner, member, or audit 
manager of the Firm who provided at least ten hours of audit services 
for any issuer during the Firm's current fiscal year or its most 
recently completed fiscal year has become a defendant or respondent in 
a civil or alternative dispute resolution proceeding initiated by a 
governmental entity or in an administrative or disciplinary proceeding 
other than a Board disciplinary proceeding. (Complete Item 4.1 and Part 
VIII.)
Item 2.10 The Firm has become aware that a proceeding meeting the 
criteria described in Items 2.4, 2.5, 2.6, 2.7, 2.8, or 2.9 above has 
been concluded as to the Firm or a partner, shareholder, principal, 
owner, member, or audit manager of the Firm (whether by dismissal, 
acceptance of pleas, through consents or settlement agreements, the 
entry of a final judgment, or otherwise). (Complete Item 4.2 and Part 
VIII.)
Item 2.11 The Firm has become aware that the Firm, or the parent or a 
subsidiary of the Firm, has become the subject of a petition filed in a 
bankruptcy court, or has otherwise become the subject of a proceeding 
in which a court or governmental agency (or, in a non-U.S. 
jurisdiction, a person or entity performing a comparable function) has 
assumed jurisdiction over substantially all of the assets or business 
of the Firm or its parent or a subsidiary. (Complete Item 4.3 and Part 
VIII.)
Certain Relationships
Item 2.12 The Firm has taken on as an employee, partner, shareholder, 
principal, or member, or has otherwise become owned or partly owned by, 
a person who is currently the subject of (a) a Board disciplinary 
sanction suspending or barring the person from being an associated 
person of a registered public accounting firm or (b) a Commission order 
under Rule 102(e) of the Commission's Rules of Practice suspending or 
denying the privilege of appearing or practicing before the Commission. 
(Complete Item 5.1 and Part VIII.)
Item 2.13 The Firm has become owned or partly owned by an entity that 
is currently the subject of (a) a Board disciplinary sanction 
suspending or revoking that entity's registration or disapproving that 
entity's application for registration, or (b) a Commission order under 
Rule 102(e) of the Commission's Rules of Practice suspending or denying 
the privilege of appearing or practicing before the Commission. 
(Complete Item 5.2 and Part VIII.)
Item 2.14 The Firm has entered into a contractual or other arrangement 
to receive consulting or other professional services from a person or 
entity meeting any of the criteria described in Items 2.12 or 2.13 
above. (Complete Item 5.3 and Part VIII.)
Licenses and Certifications
Item 2.15 The Firm has become aware that its authorization to engage in 
the business of auditing or accounting in a particular jurisdiction has 
ceased to be effective or has become subject to conditions or 
contingencies other than conditions or contingencies imposed on all 
firms engaged in the business of auditing or accounting in the 
jurisdiction. (Complete Item 6.1 and Part VIII.)
Item 2.16 The Firm has obtained a license or certification authorizing 
the Firm to engage in the business of auditing or accounting and which 
has not been identified on any Form 1 or Form 3 previously filed by the 
Firm, or there has been a change in a license or certification number 
identified on a Form 1 or Form 3 previously filed by the Firm. 
(Complete Item 6.2 and Part VIII.)
Changes in the Firm or the Firm's Board Contact Person
Item 2.17 The Firm has changed its legal name while otherwise remaining 
the same legal entity that it was before the name change. (Complete 
Item 7.1 and Part VIII.)
Item 2.18 There has been a change in the business mailing address, 
business telephone number, business facsimile number, or business e-
mail of the person most recently designated by the Firm (on Form 2, 
Form 3, or Form 4) as the Firm's primary contact with the Board, or the 
Firm is designating a new person to serve as the primary contact. 
(Complete Item 7.2 and Part VIII.)
Amendment

Item 2.19 Amendments

    If this is an amendment to a report previously filed with the 
Board--
    a. Indicate, by checking the box corresponding to this item, that 
this is an amendment.
    b. Identify the specific Item numbers of this Form (other than this 
Item 2.19) as to which the Firm's response has changed from that 
provided in the most recent Form 3 or amended Form 3 filed by the Firm 
with respect to the events reported on this Form.

[[Page 29100]]

Part III--Withdrawn Audit Reports

Item 3.1 Withdrawn Audit Reports and Consents

    If the Firm has withdrawn an audit report on financial statements, 
or withdrawn its consent to the use of its name in a report, document, 
or written communication containing an issuer's financial statements, 
and the issuer has failed to comply with a Commission requirement to 
make a report concerning the matter pursuant to Item 4.02 of Commission 
Form 8-K, provide--
    a. The issuer's name and CIK number, if any;
    b. The date(s) of the audit report(s) that the Firm has withdrawn, 
or to which the Firm's withdrawal of consent relates; and
    c. A description of the reason(s) the Firm has withdrawn the audit 
report(s) or the consent.

    Note: The 30-day period in which the Firm must report the event 
does not begin to run unless and until the issuer fails to report on 
Form 8-K within the time required by the Commission's rules. The 
Firm must then report the event on Form 3 within 30 days of the 
expiration of the required Form 8-K filing deadline, unless, within 
that 30-day period, the issuer reports on a late-filed Form 8-K.

Part IV--Certain Proceedings

Item 4.1 Criminal, Governmental, Administrative, or Disciplinary 
Proceedings

    If the Firm has indicated in this Form 3 that any of the events 
described in Items 2.4, 2.5, 2.6, 2.7, 2.8 or 2.9 has occurred, provide 
the following information with respect to each such event--
    a. The name, filing date, and case or docket number of the 
proceeding, and the nature of the proceeding, i.e., whether it is a 
criminal proceeding, a civil or alternative dispute resolution 
proceeding, or an administrative or disciplinary proceeding.
    b. The name of the court, tribunal, or body in or before which the 
proceeding was filed.
    c. An indication whether the Firm itself is a defendant or 
respondent in the proceeding and, if so, the statutes, rules, or legal 
duties that the firm is alleged to have violated, and a brief 
description of the firm's alleged conduct in violation of those 
statutes, rules, or legal duties.
    d. The names of every defendant or respondent who is a partner, 
shareholder, principal, owner, member, or audit manager of the Firm, or 
who was such either at the time the Firm received notice of the 
proceeding or at the time of the alleged conduct on which any claim or 
charge is based, and who provided at least ten hours of audit services 
for any issuer during the Firm's current fiscal year or its most recent 
fiscal year; and, as to each such defendant or respondent, the 
statutes, rules, or legal duties that he or she is alleged to have 
violated, and a brief description of his or her alleged conduct in 
violation of those statutes, rules, or legal duties.
    e. The name of any client that was the recipient of the 
professional services to which any claim or charge in the proceeding 
relates.

    Note: For the purpose of this Part, administrative or 
disciplinary proceedings include those of the Commission; any other 
federal, state, or non-U.S. agency, board, or administrative or 
licensing authority; and any professional association or body. 
Investigations that have not resulted in the commencement of a 
proceeding need not be included.

Item 4.2 Concluded Criminal, Governmental, Administrative, or 
Disciplinary Proceedings

    If any proceeding meeting the criteria described in Items 2.4, 2.5, 
2.6, 2.7, 2.8 or 2.9, including any proceeding reported in Item 4.1, 
has been concluded as to the Firm or a partner, shareholder, principal, 
owner, member, or audit manager of the Firm (whether by dismissal, 
acceptance of pleas, through consents or settlement agreements, the 
entry of a final judgment, or otherwise), provide--
    a. The name, filing date, and case or docket number of the 
proceeding, and the nature of the proceeding, i.e., whether it is a 
criminal proceeding, a civil or alternative dispute resolution 
proceeding, or an administrative or disciplinary proceeding;
    b. The name of the court, tribunal, or body in or before which the 
proceeding was filed; and
    c. A brief description of the terms of the conclusion of the 
proceeding as to the Firm or partner, shareholder, principal, owner, 
member, or audit manager.

Item 4.3 Bankruptcy or Receivership

    If the Firm, or the parent or a subsidiary thereof, has become the 
subject of a petition filed in a bankruptcy court, or has otherwise 
become the subject of a proceeding in which a court or governmental 
agency (or, in a non-U.S. jurisdiction, a person or entity performing a 
comparable function) has assumed jurisdiction over substantially all of 
the assets or business of the Firm or its parent or a subsidiary, 
provide--
    a. the name of the proceeding;
    b. the name of the court or governmental body;
    c. the date of the filing or of the assumption of jurisdiction; and
    d. the identity of the receiver, fiscal agent or similar officer, 
if applicable, and the date of his or her appointment.

Part V--Certain Relationships

Item 5.1 New Relationship With Person Subject to Bar or Suspension

    If the Firm has taken on as an employee, partner, shareholder, 
principal, or member, or has otherwise become owned or partly owned by, 
a person who is currently the subject of (a) a Board disciplinary 
sanction suspending or barring the person from being an associated 
person of a registered public accounting firm or (b) a Commission order 
under Rule 102(e) of the Commission's Rules of Practice suspending or 
denying the privilege of appearing or practicing before the Commission, 
provide--
    a. the name of the person;
    b. the nature of the person's relationship with the Firm; and
    c. the date on which the person's relationship with the Firm began.

Item 5.2 New Ownership Interest by Firm Subject to Bar or Suspension

    If the Firm has become owned or partly owned by an entity that is 
currently the subject of (a) a Board disciplinary sanction suspending 
or revoking that entity's registration or disapproving that entity's 
application for registration, or (b) a Commission order under Rule 
102(e) of the Commission's Rules of Practice suspending or denying the 
privilege of appearing or practicing before the Commission, provide--
    a. the name of the entity that has obtained an ownership interest 
in the Firm;
    b. the nature and extent of the ownership interest; and
    c. the date on which the ownership interest was obtained.

Item 5.3 Certain Arrangements To Receive Consulting or Other 
Professional Services

    If the Firm has entered into a contractual or other arrangement to 
receive consulting or other professional services from a person or 
entity meeting any of the criteria described in Items 2.12 or 2.13 
above, provide--
    a. the name of the person or entity;
    b. the date that the Firm entered into the contract or other 
arrangement; and
    c. a description of the services to be provided to the Firm by the 
person or entity.

[[Page 29101]]

Part VI--Licenses and Certifications

Item 6.1 Loss of, or Limitations Imposed on, Authorization To Engage in 
the Business of Auditing or Accounting

    If the Firm's authorization to engage in the business of auditing 
or accounting in a particular jurisdiction has ceased to be effective 
or has become subject to conditions or contingencies other than 
conditions or contingencies imposed on all firms engaged in the 
business of auditing or accounting in the jurisdiction, provide--
    a. the name of the state, agency, board or other authority that had 
issued the license or certification related to such authorization;
    b. the number of the license or certification;
    c. the date that the authorization ceased to be effective or became 
subject to conditions or contingencies, and
    d. a brief description of the reason(s) for such action, including 
a description of the conditions or contingencies, if any.

Item 6.2 New License or Certification

    If the Firm has obtained any license or certification authorizing 
the Firm to engage in the business of auditing or accounting, and which 
has not been identified on any Form 1 or Form 3 previously filed by the 
Firm, or there has been a change in any license or certification number 
identified on a Form 1 or Form 3 previously filed by the Firm, provide 
--
    a. the name of the issuing state, agency, board or other authority;
    b. the number of the license or certification;
    c. the date the license or certification took effect; and
    d. if the license or certification replaces another license or 
certification issued by the same authority, the number of the replaced 
license or certification.

    Note: If the Firm is filing a Form 4 to report a change in its 
form of organization, change in jurisdiction, or a business 
combination, the Firm should report on Form 4, rather than Form 3, 
any related license change that takes effect before the submission 
of the Form 4.

Part VII--Changes in the Firm or the Firm's Board Contact Person

Item 7.1 Change in Name of Firm

    If the Firm is reporting a change in its legal name--
    a. State the new legal name of the Firm;
    b. State the legal name of the Firm immediately preceding the new 
legal name;
    c. State the effective date of the name change;
    d. Provide a brief description of the reason(s) for the change; and
    e. Affirm, by checking the box corresponding to this Item, that, 
other than the name change, the Firm is the same legal entity that it 
was before the name change.

    Note: If, other than the name change, the Firm is not the same 
legal entity that it was before the name change, whether because of 
a change in the Firm's legal form of organization or because of 
other transactions, the registration status of the predecessor firm 
does not automatically attach to the Firm, and the Firm cannot 
report the event as a name change. If the Firm cannot make the 
affirmation required by Item 7.1.e, the Firm cannot execute the 
certification in Part VIII as to Item 7.1, and this Form cannot be 
deemed filed under Rule 2206.
    In that event, the Firm should consider whether, pursuant to the 
provisions of Rule 2108, the Firm can make the representations 
required in a Form 4 filing to enable the predecessor firm's 
registration to attach to the Firm. If the Firm cannot or does not 
file with the Board a Form 4 making all necessary representations, 
the predecessor firm's registration does not attach to the Firm. In 
those circumstances, the Firm may not lawfully prepare or issue an 
audit report without first filing an application for registration on 
Form 1 and having that application approved by the Board.


    Note: If the Firm is filing a Form 4 to report a change in its 
form of organization, change in jurisdiction, or a business 
combination, the Firm should report any related name change on Form 
4 and not on Form 3.

Item 7.2 Change in Contact Information

    If there has been a change in the business mailing address, 
business telephone number, business facsimile number, or business e-
mail address of the person most recently designated by the Firm (on 
Form 2, Form 3, or Form 4) as the Firm's primary contact with the 
Board, or if the Firm is designating a new person to serve as the 
primary contact, provide the name and current business mailing address, 
business telephone number, business facsimile number, and business e-
mail of the partner or authorized officer of the Firm who will serve as 
the Firm's primary contact with the Board.

Part VIII--Certification of the Firm

Item 8.1 Signature of Partner or Authorized Officer

    This Form must be signed on behalf of the Firm by an authorized 
partner or officer of the Firm including, in accordance with Rule 2204, 
both a signature that appears in typed form within the electronic 
submission and a corresponding manual signature retained by the Firm. 
The signer must certify that--
    a. the signer is authorized to sign this Form on behalf of the 
Firm;
    b. the signer has reviewed this Form;
    c. based on the signer's knowledge, this Form does not contain any 
untrue statement of a material fact or omit to state a material fact 
necessary to make the statements made, in light of the circumstances 
under which such statements were made, not misleading; and
    d. either--
    1. based on the signer's knowledge, the Firm has not failed to 
include in this Form any information or affirmation that is required by 
the instructions to this Form, with respect to the event or events 
being reported on this Form, or
    2. based on the signer's knowledge--
    (A) the Firm is a foreign registered public accounting firm and has 
not failed to include in this Form any information or affirmation that 
is required by the instructions to this Form, with respect to the event 
or events being reported on this Form, except for information or 
affirmations that the Firm asserts it cannot provide to the Board on 
this Form 3 without violating non-U.S. law;
    (B) with respect to any such withheld information or affirmation, 
the Firm has made the efforts required by PCAOB Rule 2207(b) and has in 
its possession the materials required by PCAOB Rule 2207(c); and
    (C) the Firm has indicated, in accordance with the instructions to 
this Form, each Item of this Form with respect to which the Firm has 
withheld any required information.
    The signature must be accompanied by the signer's title, the 
capacity in which the signer signed the Form, the date of signature, 
and the signer's business mailing address, business telephone number, 
business facsimile number, and business e-mail address.

Part IX--Exhibits

    To the extent applicable under the foregoing instructions, each 
special report must be accompanied by the following exhibits:

Exhibit 99.1 Request for Confidential Treatment

Exhibit 99.3 Materials Required by Rule 2207(c)(2)-(4)--Submit Only as 
an Exhibit to an Amended Form 3 in Response to a Request Made Pursuant 
to Rule 2207(d)

    In addition to the above rules and form instructions, the Board has 
adopted related amendments to PCAOB

[[Page 29102]]

Rules 1001, 2107, 2300, 4000, and 4003. The amendments are shown below, 
with new language italicized, deleted language in brackets, and 
unchanged language indicated by a series of three asterisks.
Section 1. General Provisions
Rule 1001. Definitions of Terms Employed in Rules
    When used in the Rules, unless the context otherwise requires:
    * * *
    (a)(vii) Audit Services
    The term ``audit services'' means [--
    (1) subject to paragraph (a)(vii)(2) of this Rule, professional 
services rendered for the audit of an issuer's annual financial 
statements, and (if applicable) for the reviews of an issuer's 
financial statements included in the issuer's quarterly reports.
    (2) effective after December 15, 2003,] professional services 
rendered for the audit of an issuer's annual financial statements, and 
(if applicable) for the reviews of an issuer's financial statements 
included in the issuer's quarterly reports or services that are 
normally provided by the accountant in connection with statutory and 
regulatory filings or engagements for those fiscal years.
    * * *
    (n)(ii) Non-Audit Services
    The term ``non-audit services'' means [--
    (1) subject to paragraph (n)(ii)(2) of this Rule, services related 
to financial information systems design and implementation as defined 
in Rule 2-01(c)(4)(ii) of Regulation S-X, 17 C.F.R. 2-01(c)(4)(ii), and 
all other services, other than audit services or other accounting 
services.
    (2) effective after December 15, 2003,] all [other] services other 
than audit services, other accounting services, and tax services.
    * * *
    (o)(i) Other Accounting Services
    The term ``other accounting services'' means [--
    (1) subject to paragraph (o)(i)(2) of this Rule, services that are 
normally provided by the public accounting firm that audits the 
issuer's financial statements in connection with statutory and 
regulatory filings or engagements and assurance and related services 
that are reasonably related to the performance of the audit or review 
of the issuer's financial statements, other than audit services.
    (2) effective after December 15, 2003,] assurance and related 
services that are reasonably related to the performance of the audit or 
review of the issuer's financial statements, other than audit services.
    * * *
Section 2. Registration And Reporting
Part 1--Registration of Public Accounting Firms
    * * *
Rule 2107. Withdrawal from Registration
    * * *
    (c) Effect of Filing
    [(1)] Beginning on the date of Board receipt of a completed Form 1-
WD, [the firm that filed the Form 1-WD shall not engage in the 
preparation or issuance of, or play a substantial role in the 
preparation or furnishing of, an audit report, other than to issue a 
consent to the use of an audit report for a prior period, unless it 
first withdraws its Form 1-WD.
    (2) Beginning on the fifth day following the Board's receipt of a 
completed Form 1-WD,] and continuing for as long as the Form 1-WD is 
pending--
    [(i) the firm may satisfy the annual reporting requirement by 
submitting a report stating that a completed Form 1-WD has been filed 
and is pending;]
    (1) the firm shall not engage in the preparation or issuance of, or 
play a substantial role in the preparation or furnishing of, an audit 
report, other than to issue a consent to the use of an audit report for 
a prior period;
    (2[i]) the firm's obligation to file annual reports on Form 2, and 
special reports on Form 3 shall be suspended;
    [(ii) any annual fee assessed shall be zero;]
    (3[iii]) the Board shall have the discretion to forego any regular 
inspection that would otherwise commence pursuant to Rule 4003(a) or 
Rule 4003(b); and
    (4[iv]) the firm's registration status shall be designated as 
``registered--withdrawal request pending,'' and the firm shall not 
publicly represent its registration status without specifying it as 
``registered--withdrawal request pending.''
    * * *
    (f) Withdrawal of Form 1-WD
    A registered public accounting firm that has submitted a Form 1-WD 
may withdraw the form at any time by filing with the Board a written 
notice of intent to withdraw the Form 1-WD along with any annual fee 
[and], annual report, and special report that the firm would have been 
required to submit during the period that the Form 1-WD was pending if 
not for the provisions of paragraph (c)(2).
Part 3--Public Availability of Applications and Reports
    Rule 2300. Public Availability of Information Submitted to the 
Board; Confidential Treatment Requests.
    (a) Except as provided in paragraph (b) below--
    (1) an application for registration will be publicly available as 
soon as practicable after the Board approves or disapproves such 
application; and
    (2) all other forms filed pursuant to Part 1 or Part 2 of this 
Section of the Rules of the Board, and any amendments thereto, will be 
publicly available as soon as practicable after filing, except to the 
extent otherwise specified in the Board's rules or the instructions to 
the form.
    (b) Confidential Treatment Requests.
    (1) A public accounting firm may request confidential treatment of 
any information submitted to the Board in connection with its 
application for registration on Form 1, and may request confidential 
treatment of information on other forms filed pursuant to Part 1 or 
Part 2 of this Section of the Rules of the Board to the extent 
specified in the instructions to the form, provided that the 
information as to which confidential treatment is requested--
    ([1]i) has not otherwise been publicly disclosed, and
    ([2]ii) either (A[i]) contains information reasonably identified by 
the public accounting firm as proprietary information, or (B[ii]) is 
protected from public disclosure by applicable laws related to the 
confidentiality of proprietary, personal, or other information.
    (2) Failure to provide an exhibit that complies with the 
requirements of paragraph (c)(2) of this Rule constitutes sufficient 
grounds for denial of any request for confidential treatment.
    (c) Application Procedures.
    To request confidential treatment of information for which such 
requests are permitted by paragraph (b)(1) of this Rule[ submitted to 
the Board in connection with an application for registration], the 
[applicant] requestor must--
    (1) identify, in accordance with the instructions [on Form 1] to 
the form, the information that it desires to keep confidential; and
    (2) include as an exhibit to [Form 1 a detailed explanation as to 
why, based on the facts and circumstances of the particular case, the 
information meets the requirements of paragraph (b) of this Rule.] the 
form a representation that, to the requestor's knowledge, the 
information for which confidential treatment is requested has not 
otherwise been publicly disclosed and--

[[Page 29103]]

    (i) a detailed explanation of the grounds on which the information 
is considered proprietary; or
    (ii) a detailed explanation of the basis for asserting that the 
information is protected by law from public disclosure and a copy of 
the specific provision of law that the requestor claims protects the 
information from public disclosure.
* * * * *
    (f) Unless the [applicant] requestor requests otherwise, the 
exhibit containing an explanation supporting a confidential treatment 
request will be afforded confidential treatment without the need for a 
request for confidential treatment.
    (g) Information as to which the Board grants confidential treatment 
under this [r]Rule will not be made available to the public by the 
Board. The granting of confidential treatment will not, however, limit 
the ability of the Board (1) to provide the information as to which 
confidential treatment was granted to the Commission, or (2) to comply 
with any subpoena validly issued by a court or other body of competent 
jurisdiction. In the event the Board receives such a subpoena, the 
Board will notify the [applicant] public accounting firm of such 
subpoena, to the extent permitted by law, to allow the [applicant] 
public accounting firm the opportunity to object to such subpoena.
* * * * *
Section 4. Inspections
Rule 4000. General
    (a) Every registered public accounting firm shall be subject to all 
such regular and special inspections as the Board may from time to time 
conduct in order to assess the degree of compliance of each registered 
public accounting firm and associated persons of that firm with the 
Act, the Board's rules, the rules of the Commission, and professional 
standards, in connection with its performance of audits, issuance of 
audit reports, and related matters involving issuers.
    (b) In furtherance of the Board's inspection process, the Board may 
at any time request that a registered public accounting firm provide to 
the Board additional information or documents relating to information 
provided by the firm in any report filed pursuant to Section 2 of these 
Rules, or relating to information that has otherwise come to the 
Board's attention. Any request for information or documents made 
pursuant to this Rule, and any information or documents provided in 
response to such a request, shall be considered to be in connection 
with the next regular or special inspection of the registered public 
accounting firm.
    (c) Inspection steps and procedures shall be performed by the staff 
of the Division of Registration and Inspections, and by such other 
persons as the Board may authorize to participate in particular 
inspections or categories of inspections.
* * * * *
Rule 4003. Frequency of Inspections
* * * * *
    (c) With respect to a registered public accounting firm that has 
filed a completed Form 1-WD under Rule 2107, the Board shall have the 
discretion to forgo any regular inspection that would otherwise 
commence during the period beginning on the [fifth day following the 
filing of the] date of Board receipt of a completed Form 1-WD and 
continuing until the firm's registration is deemed withdrawn or the 
firm withdraws the Form 1-WD.
* * * * *

II. Board's Statement of the Purpose of, and Statutory Basis for, the 
Proposed Rule

    In its filing with the Commission, the Board included statements 
concerning the purpose of, and basis for, the proposed rule. The text 
of these statements may be examined at the places specified in Item IV 
below. The Board has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of such statements.

A. Board's Statement of the Purpose of, and Statutory Basis for, the 
Proposed Rules

(a) Purpose
    Section 102(d) of the Act provides that each registered public 
accounting firm shall provide an annual report to the Board, and may be 
required to report more frequently, as necessary to update information 
in its application for registration and to provide such additional 
information as the Board or the Commission may specify. The purpose of 
the proposed new rules and forms is to establish the foundation of a 
reporting and disclosure system for registered public accounting firms 
pursuant to Section 102(d) of the Act, and to specify the details of 
certain reporting obligations and provide forms for such reporting. To 
the extent that the Board identifies additional reporting requirements 
that are necessary or appropriate in the public interest or for the 
protection of investors, the Board may propose and adopt them in the 
future.
    The proposed reporting requirements serve three fundamental 
purposes. First, firms will report information to keep the Board's 
records current about such basic matters as the firm's name, location, 
contact information, and licenses. Second, firms will report 
information reflecting the extent and nature of the firm's audit 
practice related to issuers in order to facilitate analysis and 
planning related to the Board's inspection responsibilities and to 
inform other Board functions, as well as for the value the information 
may have to the public. Third, firms will report circumstances or 
events that could merit follow-up through the Board's inspection 
process or its enforcement process, and that also may otherwise warrant 
being brought to the public's attention (such as a firm's withdrawal of 
an audit report in circumstances where the information is not otherwise 
publicly available).
    The reporting framework includes two types of reporting 
obligations. First, it requires each registered firm to provide basic 
information once a year about the firm and the firm's issuer-related 
practice over the most recent 12-month period. The firm must do so by 
filing an annual report on Form 2. Second, upon the occurrence of 
specified events, a firm must report certain information by filing a 
special report on Form 3.
    Proposed Rule 2201 sets June 30 as the deadline for the annual 
filing of Form 2. The reporting period covered by the report would be 
April 1 to March 31, leaving each firm with three months to prepare and 
file a Form 2 reflecting information from that 12-month period. Any 
firm that was registered as of March 31 of a particular year would be 
required to file Form 2 by June 30 of that year, but any firm that 
became registered in the period between and including April 1 and June 
30 would not be required to file a Form 2 until June 30 of the 
following year.
    Under the proposed rules, the occurrence of specified events 
triggers an obligation to file a special report on Form 3. The proposed 
rules provide that special reports must be filed within 30 days of the 
triggering event.
    The Board expects annual and special reports to be complete and 
accurate, and inaccuracies or omissions could form the basis for 
disciplinary sanctions for failing to comply with the reporting 
requirements reflected in Rules 2200 and 2203 and the instructions to 
Forms 2 and 3. Proposed Rule 2205 provides for the filing of amendments 
to previously filed annual or special reports if the originally filed 
report

[[Page 29104]]

included information that was incorrect at the time of the filing, or 
if the originally filed form omitted any information or affirmation 
that was, at the time of such filing, required to be included in that 
report.
    Annual and special reports will be made public on the Board's Web 
site promptly upon being filed by a firm, subject to exceptions for 
information for which a firm requests confidential treatment. The Board 
intends that as much reported information as possible be publicly 
available as soon as possible after filing. The proposed forms identify 
certain categories of information for which a firm may request 
confidential treatment. The proposed rules include new requirements 
concerning the support that a firm must supply for a confidential 
treatment request.\1\ The proposed amendments require that a firm 
support a request with both a representation that the information has 
not otherwise been publicly disclosed and either (1) a detailed 
explanation of the grounds on which the information is considered 
proprietary, or (2) a detailed explanation of the basis for asserting 
that the information is protected by law from public disclosure and a 
copy of the specific provision of law. The proposed amendments also 
provide that the firm's failure to supply the required support 
constitutes sufficient grounds for denial of the request.
---------------------------------------------------------------------------

    \1\ The proposed amendments to Rule 2300(b)-(c), concerning the 
required support, would also apply prospectively to confidential 
treatment requests on applications for registration on Form 1.
---------------------------------------------------------------------------

    Under proposed Rule 2207, a non-U.S. firm may withhold required 
information from Form 2 or Form 3 if the firm cannot provide the 
information without violating non-U.S. law. If the firm withholds 
information on that ground, it must have certain supporting materials, 
including (1) a copy of the relevant provisions of non-U.S. law, (2) a 
legal opinion concluding that the firm would violate non-U.S. law by 
submitting the information to the Board, and (3) a written explanation 
of the firm's efforts to seek consents or waivers that would be 
sufficient to overcome the conflict with respect to the information. 
The firm must certify on the form that it has the supporting materials 
in its possession. The rule reserves to the Board, and to the Director 
of the Division of Registration and Inspections, the discretion to 
require that a firm submit any of those supporting materials in a 
particular case. The rule also reserves to the Board the discretion to 
require that the firm provide any of the withheld information in a 
particular case.
    The proposed rules include an amendment to the Board's inspection 
rules that makes clear that the Board may require a firm to provide 
additional information. Specifically, existing Rule 4000 provides that 
registered firms shall be subject to such regular and special 
inspections as the Board chooses to conduct. The proposed amendment 
adds a paragraph providing that the Board, in the exercise of its 
inspection authority, may at any time request that a registered firm 
provide additional information or documents relating to information 
provided on Form 2 or Form 3, or relating to information that has 
otherwise come to the Board's attention. The amendment provides that 
the request and response are considered to be in connection with the 
firm's next regular or special inspection. Accordingly, the cooperation 
requirements of Rule 4006 apply, and the request and response are 
subject to the confidentiality restrictions of Section 105(b)(5) of the 
Act.
    Existing Rule 2107 governs the process by which a firm may seek to 
withdraw from registration with the Board. Under Rule 2107, a firm 
cannot withdraw at will, but must request the Board's permission to 
withdraw, and the Board may withhold that permission under certain 
conditions. The proposed rules include an amendment to Rule 2107 to 
change the way it addresses the reporting obligations of a firm that 
has filed Form 1-WD seeking leave to withdraw. Existing Rule 
2107(c)(2)(i) provides that, beginning on the fifth day after the Board 
receives a completed Form 1-WD, the firm can satisfy any annual 
reporting requirement by submitting a report stating that a completed 
Form 1-WD has been filed and is pending. Under the proposed amendment, 
the firm's reporting obligation, including both annual and special 
reporting, would simply be suspended while Form 1-WD was pending. If a 
firm withdraws its Form 1-WD and continues as a registered firm, 
however, Rule 2107 would require the filing of any annual or special 
reports, and the payment of any annual fee, that otherwise would have 
been required while the Form 1-WD was pending. The Board is also 
eliminating from Rule 2107 the five-day delay between receipt of a 
completed Form 1-WD and the effect of that filing on a firm's reporting 
obligation. Suspension of that obligation would occur immediately upon 
the Board's receipt of the completed Form 1-WD.\2\
---------------------------------------------------------------------------

    \2\ In connection with that change to Rule 2107, the amendment 
also eliminates the five-day delay before certain other consequences 
take effect. Among other things, the Board is amending Rule 
2107(c)(2)(iii) so that the Board would, immediately upon receipt of 
the completed Form 1-WD, have the discretion to forego any regular 
inspection of the firm that otherwise would commence. This change 
necessitates a conforming change to Rule 4003(c), and the Board is 
making that conforming change as well.
---------------------------------------------------------------------------

    The Board also proposed to delete from definitions in PCAOB Rule 
1001 certain provisions that ceased to apply after December 15, 2003. 
Specifically, the Board proposes to amend Rules 1001(a)(vii) 
(definition of ``audit services''), 1001(o)(i) (definition of ``other 
accounting services''), and 1001(n)(ii) (definition of ``tax 
services'') by deleting the paragraph denominated ``(1)'' from each 
rule.
    The proposed rules would take effect 60 days after Securities and 
Exchange Commission approval.
(b) Statutory Basis
    The statutory basis for the proposed rule is Title I of the Act.

B. Board's Statement on Burden on Competition

    The Board does not believe that the proposed rules will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rules impose no 
burden beyond burdens clearly imposed and contemplated by the Act.

C. Board's Statement on Comments on the Proposed Rules Received From 
Members, Participants or Others

    The Board released the proposed rules and form instructions for 
public comment in Release No. 2006-004 (May 23, 2006). A copy of 
Release No. 2006-004 and the comment letters received in response to 
the PCAOB's request for comment are available on the PCAOB's Web site 
at http://www.pcaobus.org. The Board received twelve written comment 
letters. The Board has clarified and modified certain aspects of the 
proposed rules and form instructions in response to the comments it 
received, as discussed below.
    Commenters voiced concern about burdens associated with the 
proposed requirement to report the percentage of total fees billed to 
all clients that is attributable to fees billed in each of four 
categories of services provided to issuer audit clients. Commenters 
indicated that firms, particularly large firms, may not be able to 
comply with the proposed requirement without making costly changes to 
their internal systems. The Board has weighed these concerns carefully, 
bearing in mind that the purposes for which the information is

[[Page 29105]]

sought do not depend upon a high level of precision in the data. The 
Board is adopting a modified version of the proposed requirement, 
incorporating some elements of alternatives suggested by commenters.
    Form 2 will allow a firm to select from two methods of calculating 
the percentages to report. Firms that are reasonably able to report the 
requested percentages based on data precisely coinciding with the 
annual reporting period (i.e., the data specified by the proposed 
requirement) may do so. As an alternative, a firm may, for each 
category of services, report the percentage derived by (1) using as a 
denominator the total fees billed to all clients in the firm's fiscal 
year that ended during the annual reporting period and (2) using as a 
numerator the total issuer audit client fees as determined by reference 
to the fee amounts disclosed to the Commission by those clients for 
each client's fiscal year that ended during the reporting period (or, 
for clients who have not made the required Commission filings, the fee 
amounts required to be disclosed). Under either approach, a firm may 
use any reasonable method to estimate the components and may round the 
reported percentages to the nearest five percent. Firms that use 
estimated data in their calculations should briefly describe their 
methodology in an exhibit to Form 2.
    Some commenters also expressed concern about what they saw as a 
disconnect between the four categories of services used in the proposed 
form and the four categories of fees that the Commission requires 
issuers to report in proxy filings. The Board reiterates that its 
definitions of these four categories of services correspond to the 
Commission's descriptions of services for which an issuer must disclose 
the fees paid to its auditor.\3\ The Board is not adopting commenters' 
suggestions to make the Board's labels conform to the Commission's 
labels (i.e., to say ``audit-related services'' instead of ``other 
accounting services'' and to say ``all other services'' instead of 
``non-audit services'') because the labels that the Board uses come 
from Section 102(b)(2)(B) of the Act and have been used in all 
applications for registration on Form 1. Commenters also noticed a 
disconnect between Item 3.2's focus on fees billed and the reference to 
``revenues'' in Item 3.2's caption. The Board has changed the caption 
to refer to fees billed instead of revenues.
---------------------------------------------------------------------------

    \3\ Compare the descriptions of services in Item 9(e) of 
Commission Schedule 14A (17 CFR 240.14a-101) under the headings 
``Audit Fees,'' ``Audit-Related Fees,'' ``Tax Fees,'' and ``All 
Other Fees'' with, respectively, the Board's definitions of ``Audit 
Services'' (Rule 1001(a)(vii)), ``Other Accounting Services'' (Rule 
1001(o)(i)), ``Tax Services'' (Rule 1001(t)(i)), and ``Non-Audit 
Services'' (Rule 1001(n)(ii)). The note to Item 3.2 on Form 2 has 
been expanded to highlight this point.
---------------------------------------------------------------------------

    Item 4.1 of Form 2 requires information relating to a firm's 
issuance of audit reports during the reporting period. As it was 
proposed, Item 4.1 would have required, among other things, the total 
number of firm personnel who exercised authority to sign the firm's 
name to an audit report during the reporting period. Commenters 
suggested various alternatives to requiring that precise number. 
Bearing in mind that, here too, the purposes for which the information 
is sought--principally inspection scoping and planning--do not depend 
upon precise information, the Board has adopted a slightly modified 
version of an approach suggested by a commenter. As adopted, Item 4.1.b 
requires a firm to indicate from among the following ranges how many 
individuals exercised the authority to sign the firm's name to an audit 
report in the reporting period: 1-9, 10-25, 26-50, 51-100, 101-200, or 
more than 200. If the firm indicates that the range is 1-9, the firm 
must also provide the exact number.
    One commenter sought clarification on whether the audit report date 
being requested referred to the date of the auditor's report, the 
report release date pursuant to PCAOB Auditing Standard No. 3, Audit 
Documentation, or the date that the issuer filed the report with the 
Commission. A note to Item 4.1 now clarifies that the date called for 
by Item 4.1.a.3 is the date of the audit report, as described in AU 
530, Dating of the Independent Auditor's Report. A note has also been 
added to clarify that it is not necessary to provide the date of any 
consent to an issuer's use of an audit report previously issued for 
that issuer, except that, if such consents constitute the only 
instances of the firm issuing audit reports for a particular issuer 
during the reporting period, the firm should include that issuer in 
Item 4.1 and include the dates of such consents in Item 4.1.a.3.
    If, during the reporting period, a firm plays a substantial role in 
the preparation or furnishing of an audit report that was issued in the 
reporting period, but the firm did not issue audit reports required to 
be reported under Item 4.1, the firm must report certain information 
under Item 4.2. As proposed, Item 4.2.a.4 would have required the firm 
to report the date of each such audit report. One commenter expressed 
concern that a firm might not have access to the date of an audit 
report issued by another firm. The Board has revised Item 4.2.a.4 to 
require, instead, the end date of the fiscal period covered by the 
financial statements that were the subject of the audit report.
    Item 5.2.a.3, as proposed, would have required the firm to state 
whether it has any ``affiliation, whether by contract or otherwise, 
with another entity through or from which the firm commonly employs or 
leases personnel to perform audit services, or with which the firm 
otherwise engages in an alternative practice structure.'' Commenters 
asked for clarification of ``commonly'' and also suggested that the 
term ``affiliation'' could cause confusion since the item does not 
appear intended to be limited to relationships commonly viewed as 
``affiliate'' relationships. The final version of Item 5.2.a.3 avoids 
the use of ``affiliation'' and ``commonly'' and requires the firm to 
state whether it has any ``arrangement, whether by contract or 
otherwise, with another entity through or from which the firm employs 
or leases personnel to perform audit services.'' One commenter also 
asked the Board to clarify that Item 5.2.a.3 does not encompass a 
firm's hiring of, or contracting for, support personnel. Item 5.2.a.3, 
by its terms, encompasses only arrangements through which the firm 
employs or leases ``personnel to perform audit services.''
    Regarding Part VI, commenters expressed concern about Item 6.1.d's 
requirement to provide information about the number of firm personnel, 
segregated by functional level, who provided audit services during the 
reporting period. Commenters stated that some firms cannot readily 
track with precision the number of such individuals. Commenters 
constructively suggested various alternative ways to collect a rough 
surrogate for that number. The Board has concluded, however, not to 
adopt any version of Item 6.1.d at this time.
    Item 6.1.b requires the firm to report the total number, as of the 
end of the reporting period, of the firm's certified public 
accountants, and requires the firm to include in that number any firm 
accountants with ``comparable licenses'' from non-U.S. jurisdictions. 
One commenter asked for clarification of the ``comparable license'' 
concept. The ``comparable license'' concept is not new, but is employed 
in the Form 1 application for registration. Even so, the commenter 
suggested clarifying that the requirement refers to accountants that 
are (1) licensed by the jurisdiction in which they render services and 
(2) by virtue of such license, are certified to perform the functions 
of a public accountant. The Board confirms this as

[[Page 29106]]

the appropriate understanding of the requirement.
    In Part VII of Form 2, the firm must report information if it 
stands in certain relationships to individuals who, or entities that, 
were the subject of a Board order imposing a disciplinary sanction or a 
Commission Rule 102(e) order entered within the five years preceding 
the end of the reporting period.
    As proposed, the Part VII items would have required a firm to 
report new relationships commenced during the reporting period, and the 
proposal would have required every firm's first Form 2 filing to report 
this information not only for the reporting period but for the entire 
period back to the cut-off date that the firm used for information it 
supplied in its Form 1 application. For hundreds of firms' first Form 2 
filings, that period would be more than five years.
    In response to comments about that burden, the Board has 
restructured the Part VII items relating to firm personnel or owners to 
capture only relationships that (1) exist as of the end of the 
reporting period, (2) are with individuals or entities whose relevant 
disciplinary sanction or Rule 102(e) order was entered within the five 
years preceding the end of the reporting period, and (3) have not 
previously been reported by the firm on Forms 1, 2, or 3. The Board has 
also restructured the Part VII item relating to receipt of consulting 
or professional services to capture only relationships that involve 
services received, or contracted for, in the reporting period. With 
these changes, a firm's first Form 2 will still effectively serve to 
fill any gap, but the burden will only extend to currently relevant 
information. Subsequent Form 2 filings need not report the same 
information again just because the relationship continues to exist at 
the end of the reporting period.
    In response to commenters' concerns and suggestions, the Board has 
also limited the scope of relevant firm personnel to those who provided 
at least ten hours of audit services for any issuer during the 
reporting period. It is important to note, however, how this change 
intersects with the structural change described above. Just because an 
individual does not meet the ten-hour threshold during the reporting 
period in which the relationship begins does not mean that the firm 
need never report the relationship. If there is a later reporting 
period in which that person meets the ten-hour threshold, and that 
reporting period end is still within five years of the entry of the 
disciplinary sanction or Commission order, the firm must report that 
relationship in its annual report for that period. The relationship 
need only be reported one time, however, and need not be reported again 
for future reporting periods in which the criteria are met.
    Also in response to comments, the Board has added a scope 
limitation to Part VII's approach concerning the firm's receipt of 
consulting or other professional services. The Board has narrowed the 
reporting trigger to encompass only arrangements for services related 
to the firm's audit practice or related to services the firm provides 
to issuer audit clients. The reporting obligation is triggered for any 
reporting period that ends less than five years after entry of the 
disciplinary sanction or Commission order and in which the firm has 
received or arranged to receive such services.
    Finally, the Board is eliminating one category of reportable 
relationships that was included in the proposal. The Board proposed 
that firms report information if they entered into a relationship with 
any individual who, while not having been sanctioned personally, was a 
principal of a firm at the time of conduct for which the firm was later 
subjected to specified sanctions. After carefully considering comments, 
however, the Board is persuaded that any occasional value this 
information might have is outweighed by the fact that treating this 
information as a risk indicator about either the firm or the individual 
has the potential to diminish the professional opportunities of (1) 
individuals who had no connection to the misconduct at all, and (2) 
individuals who had a connection to alleged misconduct, but who never 
had an opportunity to defend against charges because a regulator was 
satisfied to conclude the matter through a settlement with the firm. In 
addition, the Board is sensitive to the unusual burden that would be 
placed on firms not only to ascertain this information at the time they 
commence the relationship, but also to continually monitor for it, 
since the relevant sanction might not be entered until years after the 
conduct.
    In Part VIII of Form 2, the firm must report information if it has 
acquired another public accounting firm or taken on 75 percent or more 
of another accounting firm's principals. Commenters suggested the need 
for some clarification, and the Board has made changes to clarify two 
points. First, where the proposal referred only to acquisition of an 
``accounting firm''--which commenters correctly noted is not a term 
defined in the Act or the Board's rules--the final form now refers to a 
``public accounting firm,'' which is defined in both the Act and the 
rules. Second, with respect to taking on 75 percent or more of another 
firm's principals, the final form includes language clarifying that the 
reference is to 75 percent of the persons who were principals of the 
other firm ``as of the beginning of the reporting period.''
    Form 2 requires an annual affirmation related to the Act's 
requirements that the firm consent to cooperate with the Board and 
enforce cooperation by the firm's associated persons. Tracking the 
consent language included in Form 1, Form 2 requires the firm (1) to 
affirm its consent to cooperate with Board requests for testimony or 
documents, (2) to affirm that it has secured from each of its 
associated persons the required consents to cooperate with the Board, 
and (3) to affirm the firm's understanding and agreement that its 
cooperation and compliance, and the securing and enforcing of consents 
from its associated persons, is a condition of its continued 
registration with the Board.
    One commenter seemed to misunderstand the proposal and suggested 
that the Board make clear that this requirement is an update of the 
Form 1 consent and is required only for new employees since a firm's 
initial registration. The Form 2 affirmation does not impose a new 
substantive requirement but merely requires the firm to affirm that it 
remains aware of its continuing obligation to cooperate and that it has 
in fact been keeping up with its ongoing obligation to secure the 
requisite consents from all of its associated persons.
    The reporting framework includes accommodations for firms faced 
with potential non-U.S. legal obstacles to their ability to comply with 
Form 2 requirements. One such accommodation is reflected in a note to 
the Form 2 affirmation section. The note explains that the affirmation 
shall not be understood to include an affirmation that the firm has 
secured consents from associated persons that are unregistered foreign 
firms that assert that non-U.S. law prohibits them from providing the 
consent, as long as certain requirements concerning that assertion are 
satisfied. Two commenters expressed concern about the note's provision 
that the registered firm (filing the Form 2) must have in its 
possession documents relating to the unregistered firm's asserted 
conflict that would be sufficient to satisfy the requirements of Rule 
2207(c)(2)-(4). The commenters expressed concern about whether that 
language effectively requires the registered firm (filing the Form 2) 
to assess the substance of the unregistered

[[Page 29107]]

non-U.S. firm's conflict assertion. The note requires no such 
assessment by the registered firm, but only requires the firm to 
ascertain that the documents appear, on their face, to be the documents 
described in Rule 2207(c)(2)-(4).
    Rule 2201 sets June 30 as the deadline for the annual filing of 
Form 2. The reporting period covered by the report would be April 1 to 
March 31. Commenters suggested alternatives, such as tying a firm's 
reporting deadline to that firm's fiscal year, to avoid what those 
commenters saw as unnecessary burdens on firms. In the Board's view, a 
single filing deadline for all firms is more appropriate than varying 
deadlines tied to individual firms' fiscal years. The Board has 
considered the comments about burden and has made changes that will 
address those concerns--such as allowing a firm to use its and its 
clients' fiscal year data in reporting the fee billing information--
without introducing varying reporting periods and deadlines for 
different firms. With those changes, the required Form 2 reporting does 
not involve any complexity or burden that makes it unreasonable to 
require all firms to supply the information according to the same 
schedule.
    Under the rules, the occurrence of specified events triggers an 
obligation to file a special report on Form 3. The list of reporting 
triggers reflects the Board's decision, after consideration of 
comments, to drop some items from the list that was proposed and to 
refine the focus of other items. The changes and clarifications relate 
to a client's unauthorized use of the firm's name, reportable criminal 
and other proceedings, reportable new relationships, and changes in 
authorization to engage in the business of auditing.
    The Board has excluded from the final requirements one special 
reporting trigger that was proposed: An issuer's unauthorized use of 
the firm's name, such as by making a filing with the Commission that 
includes an audit report that the issuer falsely represents as having 
been issued by the firm. In proposing that item, the Board noted that 
it might protect investors and serve the public interest by drawing 
attention to a potential problem relatively quickly. The commenters who 
addressed the point expressed a view that this reporting requirement 
would be fundamentally about issuer conduct and, therefore, is more 
appropriately left to the Commission in the context of its disclosure 
framework and its framework for addressing Section 10A(b) reports from 
auditors. After consideration of those comments, the Board has decided 
not to adopt such a requirement at this time.
    The proposed rules included a requirement that a firm file a 
special report when it withdraws an audit report, but also provided an 
exception to that requirement if the issuer audit client had already 
disclosed the relevant information in a Form 8-K filing with the 
Commission. The views expressed by commenters on this point were 
similar to the views described above with respect to an issuer's 
unauthorized use of a firm's name.
    The Board is adopting this item as proposed. The point of this item 
is not to have the firm draw the Board's attention to potential 
problems with an issuer's financial statements. A withdrawn audit 
report is a risk indicator concerning the auditor's conduct preceding 
the withdrawal, not merely a risk indicator concerning the issuer's 
financial statements. The Board has a regulatory interest in being 
aware of that information and possibly following up on that information 
for reasons directly related to its oversight of auditors.
    Nor is the point of the item to have the firm draw the Board's 
attention to a failure by the issuer to file a required Form 8-K. The 
Board's interest is in the fact of the withdrawn audit report. In the 
usual case, the Board can obtain that information from issuer Form 8-K 
filings without requiring duplicative filing by the firm, but the Board 
cannot do so if the issuer does not file the Form 8-K. For that reason, 
the Form 3 requirement is limited to circumstances in which the 
information is not otherwise available to the Board through a Form 8-K 
filing.
    One commenter noted that if an issuer is no longer a client, the 
firm may not be in a position to monitor whether that former client has 
made the Form 8-K filing. Item 4.02(c) of Form 8-K, however, requires 
the issuer to provide the firm with a copy of the disclosures it is 
making in response to Item 4.02 no later than the day the issuer files 
the Form 8-K, and also requires the issuer to request that the firm 
furnish to the issuer a letter addressed to the Commission stating 
whether the firm agrees with the statements made by the issuer in 
response to Item 4.02. The firm should, therefore, generally be in a 
position to know whether the issuer has made the filing.
    As proposed, Form 3 would have required a firm to file a special 
report if a partner, shareholder, principal, owner, member, or audit 
manager of the firm became a defendant in criminal proceedings 
involving certain categories of offenses. After consideration of 
comments, the Board has narrowed this requirement in two respects. 
First, the Board has reformulated these Form 3 reporting triggers to 
distinguish between proceedings that arise out of conduct in providing 
audit services or other accounting services for issuers and proceedings 
that do not arise out of such conduct. As to the latter category, the 
reporting obligation will be triggered only if the relevant individual 
provided at least ten hours of audit services for any issuer during the 
firm's current or most recently completed fiscal year. Second, the 
Board has eliminated from the categories of relevant offenses two 
relatively broadly described categories: Crimes arising out of alleged 
conduct relating to ``dishonesty,'' and crimes arising out of alleged 
conduct that, if proven, ``would bear materially on the individual's 
fitness to provide audit services to issuers.''
    One commenter expressed uncertainty about whether a firm would need 
to report the event if the firm suspended or terminated the individual 
or prohibited the individual from providing audit services for issuers. 
The reporting obligation includes no such qualification. The firm's 
reporting obligation is triggered when it becomes aware of the 
proceeding, and that obligation is not cut off if the firm terminates 
its relationship with the individual.
    Some commenters sought clarification about the inclusion of 
``managers'' and ``members'' within the scope of relevant individuals. 
One commenter asked whether ``members'' was meant to include employees 
generally. ``Members'' is not meant to include all employees but, 
rather, is intended as it is often used in firms' structures and 
parlance to distinguish those with certain ownership or governance 
rights from others. Some commenters noted that ``managers'' typically 
are not owners or partners and so questioned whether the Board intended 
to include them within the scope of this requirement. The Board is 
aware of the distinction and does intend the requirement to encompass 
manager-level personnel. The Board has, however, referred in the final 
rules to ``audit manager'' rather than merely ``manager,'' to avoid any 
possible confusion about other sorts of managers, as the term is more 
generally used.
    Some commenters expressed concern about the information that Form 3 
would require the firm to provide about the proceedings that triggered 
the reporting requirement. Commenters suggested that providing 
descriptions of the proceedings could be burdensome,

[[Page 29108]]

that the descriptions would be inherently subjective, and that the 
descriptions should not be in the public arena while the proceeding is 
ongoing. The Board has not made any changes related to this point. Form 
3 requires the firm to list the statutes, rules, or legal duties that 
are alleged to have been violated, which involves no subjective or 
qualitative analysis, and requires a brief description of the alleged 
conduct, which can be drawn from the relevant complaint or charging 
document without creating any implication that the firm concedes 
anything about the allegations. If grounds exist, under Rule 2300, for 
keeping the reported information confidential, the firm may request 
confidential treatment.
    Form 3 requires a firm to file a special report if it enters into 
certain specified relationships with individuals or entities that are 
currently subject to any of the following: (1) A Board disciplinary 
sanction suspending or barring an individual from being an associated 
person of a registered public accounting firm, (2) a Board order 
disapproving an entity's application for registration, or (3) a 
Commission order under Rule 102(e) of the Commission's Rules of 
Practice suspending or denying the privilege of appearing or practicing 
before the Commission. Commenters suggested that the scope of relevant 
individuals should be limited to those who provide audit services. 
Although the Board has made such a change to the similar Form 2 
requirement, such a change is not appropriate for this Form 3 
requirement, which is generally intended to gather information about 
new relationships with persons or entities that are effectively 
restricted from providing audit services. In this context, the 
qualification suggested by commenters would have the effect of either 
negating the requirement entirely or transforming it into a requirement 
for a firm to report that a person or entity is violating such a 
restriction in connection with audits performed by the firm. For 
similar reasons, the Board has rejected suggestions to narrow the scope 
of consulting and professional services received by the firm that 
trigger this reporting requirement.
    Commenters also expressed concern about the burden associated with 
identifying the existence of the sanction or 102(e) order. Firms should 
understand, however, that to a significant extent that burden 
effectively exists regardless of whether the firm has a reporting 
obligation. Not only does the firm have an obvious need to know, for 
its own purposes, of any such limitations on the person's ability to 
provide services, but Board Rule 5301(b) provides that ``no registered 
public accounting firm that knows, or in the exercise of reasonable 
care should have known, of the suspension or bar of a person may permit 
such person to become or remain associated with it, without the consent 
of the Board, pursuant to Rule 5302, or the Commission.''\4\
---------------------------------------------------------------------------

    \4\ Rule 5301(b)'s prohibition on allowing such a person to 
``become or remain associated with'' the firm is not a prohibition 
against any and all employment or other relationships, but only a 
prohibition against allowing the person to be an ``associated'' 
person as that term is defined in Section 2(a)(9) of the Act and 
Board Rule 1001(p)(i).
---------------------------------------------------------------------------

    Form 3 requires a firm to file a special report regarding certain 
changes in its authorization to engage in the business of auditing or 
accounting in a particular jurisdiction. After considering comments, 
the Board has made wording changes to clarify three points: (1) The 
requirement is intended only to cover circumstances that involve a loss 
of the firm's authorization to engage in the business of auditing or 
accounting; (2) the proposed phrase, ``made subject to condition or 
contingencies,'' was not intended to encompass conditions or 
contingencies that are broadly applicable to all firms licensed in the 
jurisdiction; and (3) the requirement to report new licenses or 
certifications, or changes in existing licenses or certifications, is 
limited to licenses and certifications that authorize the firm to 
engage in the business of auditing or accounting.
    The proposed rules would have required that special reports on Form 
3 be filed no later than 14 days after the triggering event. Several 
commenters expressed concern that 14 days was not sufficient time in 
which to review and assess an event and report the required 
information, and that this was particularly true for non-U.S. firms 
that may need to assess possible legal obstacles to reporting and 
prepare the materials necessary to comply with Rule 2207. Commenters' 
alternative suggestions included 30 days, 45 days, 60 days, and 90 
days. The Board is persuaded that a longer period than 14 days is 
appropriate and is adopting a requirement to file special reports 
within 30 days of the triggering event.
    Commenters also raised questions about when, for certain reportable 
events, the ``trigger'' actually occurs. In particular, several 
triggering events are described in Form 3 in terms of when the firm has 
``become aware'' that something has occurred. Commenters asked for 
clarification of what it means, in this context, to say that the firm 
has become aware of a matter. The Board has added a note to the 
beginning of Part II of Form 3 to specify that the firm is deemed to 
have become aware of the relevant facts on the date that any partner, 
shareholder, principal, owner, or member of the firm first becomes 
aware of the facts. The Board believes it is reasonable to expect a 
firm to have controls designed to ensure that any such person who 
becomes aware of relevant facts understands the firm's reporting 
obligation and brings the matter to the attention of persons 
responsible for compliance with the obligation.
    As proposed, Rule 2205 would have required a firm to amend its 
filing within a fixed time after becoming aware of an error or 
omission. Commenters raised concerns about the practical difficulties 
posed in this context by reliance on the concept of a firm becoming 
``aware'' of an error or omission. The Board recognizes those 
difficulties. Rather than prescribe requirements for firms to have 
systems and procedures to surface such errors or omissions and then 
report them within a prescribed time, the Board's revised approach 
relies on the firm understanding its self-interest. The Board expects 
annual and special reports to be complete and accurate, and 
inaccuracies or omissions could form the basis for disciplinary 
sanctions for failing to comply with the reporting requirements 
reflected in Rules 2200 and 2203 and the instructions to Forms 2 and 3. 
Firms should be sufficiently motivated to have procedures to detect any 
need for amendments, and to amend filings as soon as possible, in order 
to mitigate the possibility of disciplinary sanctions for the 
inaccurate original filing.
    The amendment to Rule 4000 adds a paragraph providing that the 
Board, in the exercise of its inspection authority, may at any time 
request that a registered firm provide additional information or 
documents relating to information provided on Form 2 or Form 3, or 
relating to information that has otherwise come to the Board's 
attention. The amendment provides that the request and response are 
considered to be in connection with the firm's next regular or special 
inspection. In response to concerns raised by some commenters, the 
Board confirms that the information-gathering activity described in the 
amendment is an exercise of the Board's inspection authority. It does 
not provide a basis for the Board to compel a firm to provide 
information beyond the scope of information encompassed by the 
inspection authority, or for purposes other than assessing compliance 
by the firm or its associated persons with the

[[Page 29109]]

``Act, the rules of the Board, the rules of the Commission, or 
professional standards, in connection with its performance of audits, 
issuance of audit reports, and related matters involving issuers.''\5\
---------------------------------------------------------------------------

    \5\ Section 104(a) of the Act.
---------------------------------------------------------------------------

    Annual and special reports will be made public on the Board's Web 
site promptly upon being filed by a firm, subject to exceptions for 
information for which a firm requests confidential treatment. The 
amendments to Rule 2300 require that a firm support a request with both 
a representation that the information has not otherwise been publicly 
disclosed and either (1) a detailed explanation of the grounds on which 
the information is considered proprietary, or (2) a detailed 
explanation of the basis for asserting that the information is 
protected by law from public disclosure and a copy of the specific 
provision of law. The amendments also provide that the firm's failure 
to supply the required support constitutes sufficient grounds for 
denial of the request.
    In response to questions raised by commenters, the Board emphasizes 
that this approach to confidential treatment requests does nothing to 
change a firm's right to seek review of an initial denial of 
confidential treatment. Initial decisions will continue to be made by 
the Director of Registration and Inspections, pursuant to delegated 
authority, under Rule 2300(h). A firm may, under Rule 5468, seek Board 
review of any denial.
    One commenter noted that confidentiality protection might arise 
from sources other than statutes and regulation, including common law, 
judicial orders, and contractual terms, and that the Board should more 
broadly define the scope of documentation that may be presented in 
support of a confidential treatment request. Rule 2300(b), however, 
does not limit the scope of documentation that a firm may present to 
support its argument that the rule's criteria for confidentiality are 
satisfied. The Board also agrees that ``applicable law related to the 
confidentiality of proprietary, personal, or other information'' that 
may protect information from public disclosure is not limited to 
statutes and regulations. At the same time, however, a contractual 
agreement between two parties does not constitute ``applicable law'' 
and is unlikely to satisfy the rule's criteria.
    Under proposed Rule 2207, a non-U.S. firm may initially withhold 
required information from Form 2 or Form 3 if it could not provide the 
information without violating non-U.S. law. If non-U.S. firm withholds 
information on that ground, it must have certain supporting materials, 
including (1) a copy of the relevant provisions of non-U.S. law, (2) a 
legal opinion concluding that the firm would violate non-U.S. law by 
submitting the information to the Board, and (3) a written explanation 
of the firm's efforts to seek consents or waivers that would be 
sufficient to overcome the conflict with respect to the information.
    To address a concern raised by commenters, the Board has revised 
Rule 2207(c)(4), and added a related note at the end of the rule, to 
make clear that the rule does not require a firm to repeat previously 
futile efforts to obtain consents and waivers. Specifically, Rule 
2207(c)(4) requires the firm to prepare and maintain a written 
representation that it has made ``reasonable efforts'' to obtain 
relevant consents and waivers. The note at the end of the rule makes 
clear that the ``reasonable efforts'' element of the rule does not 
require either (1) that the firm renew efforts with parties that have 
previously declined to provide consents or waivers with respect to 
similar types of information, or (2) that the firm seek consents or 
waivers from parties other than firm personnel and firm clients.
    In its initial proposal, the Board stated that it intended for the 
reporting requirements to take effect 21 days after Commission 
approval, with ``catch-up'' Form 3 filings due 14 days later. The Board 
has considered comments expressing concern that this is too ambitious a 
schedule, and the Board is now taking a different approach. The Board 
intends that the rules, rule amendments, and Forms 2 and 3 that it is 
adopting today will take effect on the date that is 60 days after 
Commission approval. This will build in more than ample lead time for 
firms to become aware of Commission approval of the rules and to 
prepare any reports that will be due after the rules take effect.

III. Date of Effectiveness of the Proposed Rules and Timing for 
Commission Action

    Within 60 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Board consents, the Commission will:
    (a) By order approve such proposed rules; or
    (b) institute proceedings to determine whether the proposed rules 
should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed 
rules are consistent with the requirements of Title I of the Act. 
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/pcaob.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number PCAOB 2008-04 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number PCAOB 2008-04. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/pcaob/
shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule that are filed 
with the Commission, and all written communications relating to the 
proposed rule between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room, on official business days between 
the hours of 10 a.m. and 3 p.m. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
PCAOB. All comments received will be posted without change; we do not 
edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. PCAOB-2008-04 and should be 
submitted on or before July 20, 2009.


[[Page 29110]]


    By the Commission.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-14294 Filed 6-17-09; 8:45 am]

BILLING CODE 8010-01-P
