[Federal Register Volume 85, Number 246 (Tuesday, December 22, 2020)]
[Notices]
[Pages 83642-83643]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28156]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 10905; Release No. 90693]


Order Approving Public Company Accounting Oversight Board Budget 
and Annual Accounting Support Fee for Calendar Year 2021

December 16, 2020.
    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. 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 Securities and Exchange Commission (the 
``Commission''). The PCAOB is to accomplish these goals through the 
registration of public accounting firms, standard setting, inspections, 
and investigation and disciplinary programs. The PCAOB is subject to 
the comprehensive oversight of the Commission.
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    \1\ 15 U.S.C. 7201 et seq.
    \2\ Public Law 111-203, 124 Stat. 1376 (2010).
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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 
are subject to approval by the Commission. In addition, the PCAOB must 
allocate the annual accounting support fee among issuers and among 
brokers and dealers.
    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 (the ``budget rule'') governs the Commission's review and 
approval of PCAOB budgets and annual accounting support fees.\3\ The 
budget rule provides, among other things, a timetable for the 
preparation and submission of the PCAOB budget

[[Page 83643]]

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 2020 the PCAOB 
provided the Commission with a narrative description of its program 
issues and outlook for the 2021 budget year. In response, the 
Commission provided the PCAOB with economic assumptions and general 
budgetary guidance for the 2021 budget year. The PCAOB subsequently 
delivered a preliminary budget and budget justification to the 
Commission. Staff from the Commission's Office of the Chief Accountant 
and Office of Financial Management dedicated a substantial amount of 
time to the review and analysis of the PCAOB's programs, projects, and 
budget estimates and attended several meetings with staff of the PCAOB 
to further develop the 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 ``passback'' letter to the 
PCAOB on October 28, 2020. On November 19, 2020, the PCAOB adopted its 
2021 budget and accounting support fee 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 2021 budget adopted by the PCAOB that are 
not properly recoverable through the annual accounting support fee, and 
the Commission believes that the aggregate proposed 2021 annual 
accounting support fee does not exceed the PCAOB's aggregate 
recoverable budget expenses for 2021.
    Significant uncertainty surrounding the impact of COVID-19 on the 
PCAOB's operations reinforces the importance of continued coordination 
between the SEC and PCAOB. The Commission directs the PCAOB during 2021 
to continue to schedule monthly meetings, as necessary, with the 
Commission's staff to discuss important policy initiatives, changes 
related to program areas, and significant impacts to the PCAOB's 2021 
budget, including significant differences between actual and budgeted 
amounts and anticipated cost-savings. Separately, the Commission 
directs the PCAOB to continue its written quarterly updates on recent 
activities, including strategic initiatives, for the PCAOB's Office of 
Economic and Risk Analysis, Office of Data, Security, and Technology, 
and Division of Registration and Inspections. The PCAOB Board will make 
itself available to meet with the Commissioners on these and other 
topics. The PCAOB should also submit its 2020 annual report to the 
Commission by March 31, 2021.
    The Commission understands that the Office of Management and Budget 
(``OMB'') has determined that the 2021 budget of the PCAOB is subject 
to sequestration under the Budget Control Act of 2011.\4\ For 2020, the 
PCAOB sequestered $16.8 million. That amount will become available in 
2021. For 2021, the sequestration amount will be 5.7% or $16.4 million. 
Consequently, we expect the PCAOB will have approximately $0.4 million 
in excess funds available from the 2020 sequestration for spending in 
2021. Accordingly, the PCAOB has reduced its accounting support fee for 
2021 by approximately $0.4 million.
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    \4\ OMB Report to the Congress on the Joint Committee Reductions 
for Fiscal Year 2021, February 10, 2020, available at https://www.whitehouse.gov/wp-content/uploads/2020/02/JC-sequestration_report_FY21_2-10-20.pdf.
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    The Commission has determined that the PCAOB's 2021 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 2021 are approved.

    By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-28156 Filed 12-21-20; 8:45 am]
BILLING CODE 8011-01-P


