
[Federal Register Volume 78, Number 34 (Wednesday, February 20, 2013)]
[Notices]
[Pages 11915-11916]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-03791]


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SECURITIES AND EXCHANGE COMMISSION

[Securities Act of 1933, Release No. 9384/February 13, 2013; Securities 
Exchange Act of 1934, Release No. 68921/February 13, 2013]


Order Approving Public Company Accounting Oversight Board Budget 
and Annual Accounting Support Fee for Calendar Year 2013

    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\ Pub. L. 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

[[Page 11916]]

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 2012 the PCAOB 
provided the Commission with a narrative description of its program 
issues and outlook for the 2013 budget year. In response, the 
Commission provided the PCAOB with economic assumptions and budgetary 
guidance for the 2013 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 2012 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 28, 
2012, the PCAOB approved its 2013 budget during an open meeting, and 
subsequently submitted that budget to the Commission for approval.
    After considering the above, the Commission did not identify any 
proposed disbursements in the 2013 budget adopted by the PCAOB that are 
not properly recoverable through the annual accounting support fee, and 
the Commission believes that the aggregate proposed 2013 annual 
accounting support fee does not exceed the PCAOB's aggregate 
recoverable budget expenses for 2013. The Commission also acknowledges 
the PCAOB's updated strategic plan and is supportive of the Board's 
plans to begin work on its six new near-term priority projects. The 
Commission encourages the PCAOB to keep the Commission and its staff 
apprised of developments throughout the implementation of these near-
term projects and looks forward to providing views to the PCAOB as 
future updates are made to the plan.
    The Commission understands that over the past year, the PCAOB has 
taken significant and productive steps to improve its information 
technology (``IT'') program. These steps include IT staffing changes, 
implementing stronger IT governance structures, and strengthening Board 
oversight over its IT program. Based upon updates provided by the 
PCAOB, the Commission also understands that these efforts are ongoing; 
and 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 continue to 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.
    The Commission also directs the PCAOB during the 2013 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 2013, 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 understands that the Office of Management and Budget 
(``OMB'') has determined the 2013 budget of the PCAOB to be 
sequestrable under the Budget Control Act of 2011.\4\ Unless 
legislation occurs that avoids sequestration, the PCAOB's 2013 spending 
level could be reduced by an amount that would be determined by OMB. In 
the event that sequestration is not avoided and OMB does not alter its 
determination that the PCAOB's 2013 budget is sequestrable, we expect 
the PCAOB to work with the Commission and Commission staff as 
appropriate regarding implementation of sequestration. In that event, 
the Commission also directs the PCAOB to provide the Commission with 
reports detailing the PCAOB's plans for implementation of 
sequestration, including how it will impact the PCAOB's 2013 spending 
for each of the PCAOB's program areas and cost categories.
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    \4\ See ``OMB Report Pursuant to the Sequestration Transparency 
Act of 2012'' (Pub. L. 112-155), page 218 of 224 at: http://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/stareport.pdf.
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    The Commission has determined that the PCAOB's 2013 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 2013 are approved.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-03791 Filed 2-19-13; 8:45 am]
BILLING CODE 8011-01-P


