[Federal Register Volume 68, Number 84 (Thursday, May 1, 2003)]
[Notices]
[Pages 23335-23336]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-10781]


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SECURITIES AND EXCHANGE COMMISSION


Securities Act of 1933, Release No. 8222/April 25, 2003, 
Securities Exchange Act of 1934, Release No. 47745/April 25, 2003; 
Order Regarding Section 103(a)(3)(B) of the Sarbanes-Oxley Act of 2002

    The Sarbanes-Oxley Act of 2002 (``Act'') established the Public 
Company Accounting Oversight Board (``PCAOB'') and charged it with the 
responsibility of overseeing the audits of public companies that are 
subject to the U.S. Federal securities laws. Under the Act, the PCAOB's 
duties include the establishment of auditing, quality control, ethics, 
independence and other standards relating to public company audits. In 
connection with this standard-setting responsibility, section 
103(a)(3)(B) of the Act provides that the PCAOB may adopt ``any portion 
of any statement of auditing standards or other professional standards 
that the [PCAOB] determines satisfy the requirements of [the Act] and 
that were proposed by 1 or more professional groups of accountants' as 
initial or transitional standards, to the extent the PCAOB determines 
necessary. This section of

[[Page 23336]]

the Act also provides that any such initial or transitional standards 
shall be separately approved by the Commission at the time it makes the 
determination required by section 101(d) of the Act, without regard to 
the procedures that otherwise would apply to Commission approval of 
PCAOB rules.
    The PCAOB has determined that is it necessary in the public 
interest and for the protection of investors to adopt initial or 
transitional professional standards (which it refers to as ``interim'' 
standards) as permitted by section 103(a)(3)(B) of the Act. In this 
connection, the PCAOB has advised the Commission that it has adopted 
the following rules setting forth interim standards that the PCAOB 
finds satisfy the requirements of section 103(a)(3)(A)(i) of the Act.

Rule 3200T. Interim Auditing Standards

    In connection with the preparation or issuance of any audit 
report, a registered public accounting firm, and its associated 
persons, shall comply with generally accepted auditing standards, as 
described in the AICPA Auditing Standards Board's Statement of 
Auditing Standards No. 95, as in existence on April 16, 2003 
(Codification of Statements on Auditing Standards, AU Sec.  150 
(AICPA 2002)).

    Note: Under section 102(a) of the Act, public accounting firms 
are not required to be registered with the Board until 180 days 
after the date of the determination of the Commission under section 
101(d) that the Board has the capacity to carry out the requirements 
of Title I of the Act (the ``mandatory registration date''). The 
Board intends that, during the period preceding the mandatory 
registration date, the Interim Auditing Standards apply to public 
accounting firms that would be required to be registered after the 
mandatory registration date and to associated persons of those 
firms, as if those firms were registered public accounting firms.

Rule 3300T. Interim Attestation Standards

    In connection with an engagement (i) described in the AICPA's 
Auditing Standards Board's Statement on Standards for Attestation 
Engagements No. 10 (Codification of Statements on Auditing 
Standards, AT Sec.  101.01 (AICPA 2002)) and (ii) related to the 
preparation or issuance of audit reports for issuers, a registered 
public accounting firm, and its associated persons, shall comply 
with the AICPA Auditing Standards Board's Statements on Standards 
for Attestation Engagements, and related interpretations and 
Statements of Position, as in existence on April 16, 2003.

    Note: The Board intends that, during the period preceding the 
mandatory registration date, the Interim Attestation Standards apply 
to public accounting firms that would be required to be registered 
after the mandatory registration date and to associated persons of 
those firms, as if those firms were registered public accounting 
firms.

Rule 3400T. Interim Quality Control Standards

    A registered public accounting firm, and its associated persons, 
shall comply with quality control standards, as described in--
    (a) the AICPA's Auditing Standards Board's Statements on Quality 
Control Standards, as in existence on April 16, 2003 (AICPA 
Professional Standards, QC Sec. Sec.  20-40 (AICPA 2002)); and
    (b) the AICPA SEC Practice Section's Requirements of Membership 
(d), (f)(first sentence), (l), (m), (n)(1) and (o), as in existence 
on April 16, 2003 (AICPA SEC Practice Section Manual Sec.  
1000.08(d), (f), (j), (m), (n)(1) and (o)).

    Note: The second sentence of requirement (f) of the AICPA SEC 
Practice Section's Requirements of Membership provided for the 
AICPA's peer review committee to ``authorize alternative 
procedures'' when the requirement for a concurring review could not 
be met because of the size of the firm. This provision is not 
adopted as part of the Board's Interim Quality Control Standards. 
After the effective date of the Interim Quality Control Standards, 
requests for authorization of alternative procedures to a concurring 
review may, however, be directed to the Board.


    Note: The Board intends that, during the period preceding the 
mandatory registration date, the Interim Quality Control Standards 
apply to public accounting firms that would be required to be 
registered after the mandatory registration date and to associated 
persons of those firms, as if those firms were registered public 
accounting firms.

Rule 3500T. Interim Ethics Standards

    In connection with the preparation or issuance of any audit 
report, a registered public accounting firm, and its associated 
persons, shall comply with ethics standards, as described in the 
AICPA's Code of Professional Conduct Rule 102, and interpretations 
and rulings thereunder, as in existence on April 16, 2003 (AICPA 
Professional Standards, ET Sec. Sec.  102 and 191 (AICPA 2002)).

    Note: The Board intends that, during the period preceding the 
mandatory registration date, the Interim Ethics Standards apply to 
public accounting firms that would be required to be registered 
after the mandatory registration date and to associated persons of 
those firms, as if those firms were registered public accounting 
firms.

Rule 3600T. Interim Independence Standards

    In connection with the preparation or issuance of any audit 
report, a registered public accounting firm, and its associated 
persons, shall comply with independence standards--
    (1) as described in the AICPA's Code of Professional Conduct 
Rule 101, and interpretations and rulings thereunder, as in 
existence on April 16, 2003 (AICPA Professional Standards, ET 
Sec. Sec.  101 and 191 (AICPA 2002)); and
    (2) Standards Nos. 1, 2, and 3, and Interpretations 99-1, 00-1, 
and 00-2, of the Independence Standards Board.

    Note: The Board's Interim Independence Standards do not 
supercede the Commission's auditor independence rules. See Rule 2-01 
of Reg. S-X, 17 CFR 240.2-01. Therefore, to the extent that a 
provision of the Commission's rule is more restrictive--or less 
restrictive--than the Board's Interim Independence Standards, a 
registered public accounting firm must comply with the more 
restrictive rule.


    Note: The Board intends that, during the period preceding the 
mandatory registration date, the Interim Independence Standards 
apply to public accounting firms that would be required to be 
registered after the mandatory registration date and to associated 
persons of those firms, as if those firms were registered public 
accounting firms.


    Each of the interim standards set forth above would remain in 
effect until modified or superceded, either by PCAOB action approved by 
the Commission as provided in the Act, or by Commission action pursuant 
to its independent authority under the federal securities laws and the 
rules and regulations thereunder. The Commission finds that the 
adoption of interim professional standards is consistent with the 
requirements of the Act and the federal securities laws and is 
necessary or appropriate in the public interest or for the protection 
of investors. Accordingly,
    It is Ordered that PCAOB Rules 3200T through 3600T, setting forth 
interim professional standards for use in connection with the audits of 
public companies, are hereby approved.

    By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 03-10781 Filed 4-30-03; 8:45 am]
BILLING CODE 8010-01-P