
[Federal Register Volume 77, Number 11 (Wednesday, January 18, 2012)]
[Notices]
[Pages 2576-2577]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-764]


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SECURITIES AND EXCHANGE COMMISSION

[Securities Act of 1933 Release No. 33-9294/January 11, 2012 Securities 
Exchange Act of 1934 Release No. 34-66141/January 11, 2012]


Order Approving Public Company Accounting Oversight Board Budget 
and Annual Accounting Support Fee for Calendar Year 2012

    The Sarbanes-Oxley Act of 2002, as amended (the ``Sarbanes-Oxley 
Act''),\1\ established the Public Company Accounting Oversight Board 
(``PCAOB'') to oversee the audits of companies that are subject to the 
securities laws, and related matters, in order to protect the interests 
of investors and further the public interest in the preparation of 
informative, accurate and independent audit reports. The PCAOB is to 
accomplish these goals through registration of public accounting firms 
and standard setting, inspection, and disciplinary programs. The PCAOB 
is subject to the comprehensive oversight of the Securities and 
Exchange Commission (the ``Commission'').
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    \1\ 15 U.S.C. 7201 et seq.
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    Section 109 of the Sarbanes-Oxley Act provides that the PCAOB shall 
establish a reasonable annual accounting support fee, as may be 
necessary or appropriate to establish and maintain the PCAOB. Under 
Section 109(f) of the Sarbanes-Oxley Act, the aggregate annual 
accounting support fee shall not exceed the PCAOB's aggregate 
``recoverable budget expenses,'' which may include operating, capital 
and accrued items. The PCAOB's annual budget and accounting support fee 
is subject to approval by the Commission.
    Section 982 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (the ``Dodd-Frank Act'') \2\ amended the Sarbanes-Oxley 
Act to provide the PCAOB with explicit authority to oversee auditors of 
broker-dealers registered with the Commission. In addition, the PCAOB 
must allocate the annual accounting support fee among issuers and among 
brokers and dealers.
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    \2\ Public Law 111-203, 124 Stat. 1376 (2010).
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    Section 109(b) of the Sarbanes-Oxley Act directs the PCAOB to 
establish a budget for each fiscal year in accordance with the PCAOB's 
internal procedures, subject to approval by the Commission. Rule 190 of 
Regulation P facilitates the Commission's review and approval of PCAOB 
budgets and annual accounting support fees.\3\ This budget rule 
provides, among other things, a timetable for the preparation and 
submission of the PCAOB budget and for Commission actions related to 
each budget, a description of the information that should be included 
in each budget submission, limits on the PCAOB's ability to incur 
expenses and obligations except as provided in the approved budget, 
procedures relating to supplemental budget requests, requirements for 
the PCAOB to furnish on a quarterly basis certain budget-related 
information, and a list of definitions that apply to the rule and to 
general discussions of PCAOB budget matters.
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    \3\ 17 CFR 202.190.
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    In accordance with the budget rule, in March 2011 the PCAOB 
provided the Commission with a narrative description of its program 
issues and outlook for the 2012 budget year. In response, the 
Commission provided the PCAOB with economic assumptions and budgetary 
guidance for the 2012 budget year. The PCAOB subsequently delivered a 
preliminary budget and budget justification to the Commission. Staff 
from the Commission's Offices of the Chief Accountant and Financial 
Management dedicated a substantial amount of time to the review and 
analysis of the PCAOB's programs, projects and budget estimates; 
reviewed the PCAOB's estimates of 2011 actual spending; and attended 
several meetings with management and staff of the PCAOB to further 
develop an understanding of the PCAOB's budget and operations. During 
the course of this review, Commission staff relied upon representations 
and supporting documentation from the PCAOB. Based on this review, the 
Commission issued a ``pass back'' letter to the PCAOB.
    On November 30, 2011, the PCAOB approved its 2012 budget during an 
open meeting and submitted that budget to the Commission for approval. 
Upon review of the submitted budget and budget justification, 
Commission staff raised questions regarding the calculation and 
presentation of the accounting support fee in the budget justification. 
On December 23, 2011, the PCAOB supplemented the original budget 
justification with additional materials, including a revised 
calculation and presentation of the accounting support fee. Due to the 
time needed to resolve this matter, consideration of the budget and 
accounting support fee was delayed beyond the normal expected date of 
December 23rd.\4\
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    \4\ See 17 CFR 202.190(c). The budget rule also provides that in 
the event the Commission has not approved a budget prior to the 
beginning of the fiscal year, the PCAOB may spend funds from its 
reserve and continue to incur obligations as if the budget most 
recently approved by the Commission were continuing in effect. See 
17 CFR 202.190(e)(3).

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[[Page 2577]]

    After considering the above, the Commission did not identify any 
proposed disbursements in the 2012 budget adopted by the PCAOB that are 
not properly recoverable through the annual accounting support fee, and 
the Commission believes that the aggregate proposed 2012 annual 
accounting support fee does not exceed the PCAOB's aggregate 
recoverable budget expenses for 2012. The Commission also acknowledges 
the PCAOB's updated strategic plan and looks forward to providing views 
to the PCAOB as future updates are made to the plan.
    In light of the recent report on information technology (``IT'') 
governance and staffing by the PCAOB's Office of Internal Oversight and 
Performance Assurance,\5\ the Commission understands that the PCAOB has 
recently taken, and plans to continue to take, significant steps 
designed to improve its IT program. These steps include IT staffing 
changes, conducting a review of the IT program, implementing IT 
governance structures, and strengthening Board oversight over its IT 
program. In addition to these important steps, the Commission directs 
the Board to continue to provide in its quarterly reports to the 
Commission detailed information about the state of the PCAOB's IT 
program, including planned, estimated, and actual costs for IT 
projects, and the level of involvement of consultants. These reports 
also should include: (a) a discussion of the Board's assessment of the 
progress and implementation of the Board actions mentioned above; and 
(b) the quarterly IT report that will be prepared by PCAOB staff and 
submitted to the Board.
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    \5\ The PCAOB's Office of Internal Oversight and Performance 
Assurance provides internal examination of the programs and 
operations of the PCAOB. A public summary of the Office's report on 
IT is available here: http://pcaobus.org/InternalOversight/Documents/2011_Information_Technology.pdf.
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    The Commission also directs the PCAOB during the 2012 budget cycle 
to continue to include in its quarterly reports to the Commission 
information about the PCAOB's inspections program. Such information is 
to include: (a) Statistics relative to the numbers and types of firms 
budgeted and expected to be inspected in 2012, including by location 
and by year the inspections that are required to be conducted in 
accordance with the Sarbanes-Oxley Act and PCAOB rules; (b) information 
about the timing of the issuance of inspections reports for domestic 
and non-U.S. inspections; and (c) updates on the PCAOB's efforts to 
establish cooperative arrangements with respective non-U.S. authorities 
for inspections required in those countries.
    The Commission has determined that the PCAOB's 2012 budget and 
annual accounting support fee are consistent with Section 109 of the 
Sarbanes-Oxley Act. Accordingly,
    It is ordered, pursuant to Section 109 of the Sarbanes-Oxley Act, 
that the PCAOB budget and annual accounting support fee for calendar 
year 2012 are approved.

    By the Commission.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-764 Filed 1-17-12; 8:45 am]
BILLING CODE 8011-01-P


