[Federal Register Volume 68, Number 84 (Thursday, May 1, 2003)]
[Notices]
[Pages 23336-23337]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-10782]


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SECURITIES AND EXCHANGE COMMISSION


Securities Act of 1933, Release No. 8223/April 25, 2003, 
Securities Exchange Act of 1934, Release No. 47746/April 25, 2003; 
Order Regarding Section 101(d) 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 registering public accounting firms; establishing 
auditing, quality control, ethics, independence and other standards 
relating to public company audits; conducting inspections, 
investigations and disciplinary proceedings of

[[Page 23337]]

registered accounting firms; and enforcing compliance with the Act. The 
Commission has authority to oversee the operations of the PCAOB, 
including but not limited to the authority to appoint or remove members 
of the PCAOB, to approve its budget and rules, and to entertain appeals 
of adverse PCAOB inspection reports and disciplinary actions.
    Section 101(d) of the Act provides that, no later than 270 days 
after the establishment of the PCAOB, the members of the PCAOB ``shall 
take such action (including hiring of staff, proposal of rules, and 
adoption of initial and transitional auditing and other professional 
standards) as may be necessary or appropriate to enable the Commission 
to determine * * * that the Board is so organized and has the capacity 
to carry out the requirements of [the Act], and to enforce compliance 
with [the Act] by registered public accounting firms and associated 
persons thereof.'' The purpose of the provision was to assure that the 
PCAOB is prepared to undertake promptly its statutory responsibilities.
    Since the appointment of its board members, the PCAOB has 
undertaken many actions to demonstrate its readiness to carry out the 
requirements of the Act. For example, it has hired or substantially 
completed the hiring process to fill, on a permanent or acting basis, a 
majority of its key positions, including the Director of Registration 
and Inspections and the Chief Auditor. The PCAOB has adopted by-laws 
and proposed for public comment a code of conduct and ethical standards 
for PCAOB members and staff.
    The PCAOB has adopted its budget for the calendar year 2003. It 
also has determined and submitted to the Commission a proposed formula 
for the computation of an Annual Accounting Support Fee for calendar 
year 2003. The PCAOB has adopted, and submitted to the Commission for 
approval, a plan for assessment, billing and collection of registration 
fees, annual fees and Annual Accounting Support Fees.
    The PCAOB has begun to adopt rules for the profession. For example, 
it has proposed rules relating to the registration of public accounting 
firms and has supplemented its comment process on that proposal by 
holding a public roundtable meeting to solicit views on issues relating 
to the registration of non-U.S. public accounting firms. The PCAOB has 
adopted interim professional standards relating to auditing, 
attestation, independence, quality control, and ethical conduct of 
auditors. These standards are the subject of a separate Commission 
Order. After the date of that Order, no professional standards in these 
areas, as they relate to the audit of public companies, will take 
effect unless approved by the PCAOB under its statutory rulemaking 
process and published for comment and approved by the Commission. The 
PCAOB also has issued a policy statement setting forth a blueprint for 
its future standard-setting procedures, including a planned review of 
the interim standards.
    Finally, the PCAOB has developed a plan for inspecting accounting 
firms. It has also prepared a plan to develop procedures and standards 
governing disciplinary proceedings and the imposition of sanctions 
against accounting firms and their associates.
    As a result of these actions, but without this Order constituting 
approval of any specific PCAOB action, the Commission determines that 
the PCAOB is so organized and has the capacity to carry out the 
requirements of the Act and to enforce compliance with the Act by 
registered public accounting firms and associated persons thereof, as 
required by section 101(d) of the Act. Accordingly,
    It is Ordered that the Commission hereby determines that the PCAOB 
has satisfied the requirements of section 101(d) of the Act.

    By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 03-10782 Filed 4-30-03; 8:45 am]
BILLING CODE 8010-01-P