[Federal Register Volume 87, Number 249 (Thursday, December 29, 2022)]
[Notices]
[Pages 80211-80212]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-28338]


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SECURITIES AND EXCHANGE COMMISSION

[Securities Act of 1933 Release No. 11142/December 23, 2022; Securities 
Exchange Act of 1934 Release No. 96577/December 23, 2022]


Order Approving Public Company Accounting Oversight Board Budget 
and Annual Accounting Support Fee for Calendar Year 2023

    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 \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 investor protection and public interest goals 
through the registration of public accounting firms, standard setting, 
inspections, and investigation and disciplinary programs. The PCAOB is 
subject to the

[[Page 80212]]

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 
estblish 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 
registered 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 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 provide 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 2022 the PCAOB 
provided the Commission with a narrative description of its program 
issues and outlook for the 2023 budget year. In response, the 
Commission provided the PCAOB with economic assumptions and general 
budgetary guidance for the 2023 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 participated in 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 27, 2022. On November 18, 2022, the PCAOB adopted its 
2023 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 2023 budget adopted by the PCAOB that are 
not properly recoverable through the annual accounting support fee, and 
the Commission believes that the aggregate proposed 2023 annual 
accounting support fee does not exceed the PCAOB's aggregate 
recoverable budget expenses for 2023.
    The Commission continues to emphasize the importance of the PCAOB's 
identification of efficiencies and process improvements. Accordingly, 
the Commission requests that the PCAOB evaluate its operational 
efficiency, improvements, and budgetary needs and submit such 
assessments to the Commission in connection with the 2024 budget cycle.
    Coordination between the SEC and PCAOB continues to be important. 
The Commission directs the PCAOB during 2023 to continue to hold 
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 2023 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 Commission expects the PCAOB to make itself 
available to meet with individual Commissioners on these and other 
topics. Further, the Commission requests that the PCAOB submit its 2022 
annual report to the Commission by March 31, 2023.
    The Commission understands that the Office of Management and Budget 
(``OMB'') has determined that the 2023 budget of the PCAOB is subject 
to sequestration under the Budget Control Act of 2011.\4\ For 2022, the 
PCAOB sequestered $17.7 million. That amount will become available in 
2023. For 2023, the sequestration amount will be 5.7% or $19.9 million. 
Consequently, we expect the PCAOB will have approximately $2.2 million 
less funds available from the 2022 sequestration for spending in 2023. 
Accordingly, the PCAOB should submit a revised spending plan for 2023 
reflecting a $2.2 million reduction to budgeted expenditures as a 
result of the increase in sequestration amount from 2022 to 2023.
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    \4\ OMB Report to the Congress on the BBEDCA 251A Sequestration 
for Fiscal Year 2023 (Mar. 28, 2022), available at https://www.whitehouse.gov/wp-content/uploads/2022/03/BBEDCA_251A_Sequestration_Report_FY2023.pdf.
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    The Commission has determined that the PCAOB's 2023 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 2023 are approved.

    By the Commission.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2022-28338 Filed 12-28-22; 8:45 am]
BILLING CODE 8011-01-P


