Federal Register, Volume 78 Issue 34 (Wednesday, February 20, 2013)

[Federal Register Volume 78, Number 34 (Wednesday, February 20, 2013)]
[Notices]
[Pages 11915-11916]
From the Federal Register Online via the Government Publishing 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