[Federal Register Volume 68, Number 145 (Tuesday, July 29, 2003)]
[Notices]
[Pages 44553-44554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19178]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48212; File No. PCAOB-2003-01]


Public Company Accounting Oversight Board; Order Approving 
Proposed Rules Relating to Bylaws

July 23, 2003.

I. Introduction

    On March 3, 2003, the Public Company Accounting Oversight Board 
(``Board'' or ``PCAOB'') filed with the Securities and Exchange 
Commission (``Commission'') proposed rules PCAOB-2003-01 pursuant to 
Sections 101 and 107 of the Sarbanes-Oxley Act of 2002 (``Act''). On 
April 30, 2003, the PCAOB filed amendment No. 1 to those proposed 
rules. Notice of the bylaws, as amended, was published in the Federal 
Register on June 18, 2003.\1\ The Commission received no comment 
letters. For the reasons discussed below, the Commission is granting 
approval of the proposed rules.
---------------------------------------------------------------------------

    \1\ Securities Exchange Act Release No. 48027 (June 13, 2003); 
68 FR 36614 (June 18, 2003).
---------------------------------------------------------------------------

II. Description

    Section 101(d) of the Act directs the PCAOB to organize and achieve 
the capacity necessary to carry out the purposes of the Act, and 
Section 101(g)(1) of the Act directs the PCAOB to adopt rules to 
provide for the operation and administration of the Board, the exercise 
of its authority, and the performance of its responsibilities under the 
Act. In furtherance of these provisions and its general obligations 
under the Act, the PCAOB has adopted a set of bylaws to establish 
rules, standards and procedures for the conduct of the PCAOB's business 
affairs. The PCAOB approved the bylaws on January 9, 2003, and 
authorized filing them with the Commission.\2\ The bylaws were filed 
with the Commission's Office of the Secretary in March 2003 for 
publication and comment pursuant to the requirements of Section 107(b) 
of the Act and Section 19(b) of the Securities Exchange Act of 1934 
(``Exchange Act''). On April 25, 2003, the PCAOB adopted an amendment 
to Article VI of the bylaws to specify the powers of the PCAOB's Chair. 
On April 30, 2003, the PCAOB filed its Amendment No. 1 to the proposed 
bylaws.
---------------------------------------------------------------------------

    \2\ Under the Act, the Board's bylaws are rules that must be 
approved by the Commission. See Section 2(a)(13) of the Act.
---------------------------------------------------------------------------

    The bylaws consist of nine Articles and contain, among other 
things:
    A. Rules to determine the presence of a quorum of the PCAOB.
    B. Establishment of a requirement to hold at least one public 
meeting per month.
    C. Appointment of officers of the PCAOB.
    D. Terms of indemnification of officers, employees and members of 
the PCAOB against claims arising from conduct in connection with the 
performance of their duties to the PCAOB.
    E. Grant of authority to the PCAOB to purchase insurance against 
claims that may be asserted against officers, employees and members of 
the PCAOB in connection with the business relationship between such 
persons and the PCAOB.
    F. Grant of authority to the PCAOB to adopt rules to govern the 
PCAOB as deemed necessary or appropriate to enable the PCAOB to 
discharge its responsibilities under the Act.
    G. Rules under which capital expenditures and investments may be 
made by the PCAOB.
    H. Establishment of a requirement that the PCAOB retain an 
accounting firm to annually audit the financial records of the PCAOB.
    I. Delineation of the authority of the Chairman.

III. Discussion

    The Act requires the Board, among other things, to oversee the 
audits of the financial statements of public companies that are subject 
to the securities laws in order to protect the interests of investors 
and further the public interest in having auditors prepare informative, 
accurate, and independent audit reports.\3\
---------------------------------------------------------------------------

    \3\ Section 101(a) of the Act.
---------------------------------------------------------------------------

    Title I of the Act established the Board as a nonprofit 
corporation, subject to and with all the powers conferred upon a 
nonprofit corporation by the District of Columbia Nonprofit Corporation 
Act.\4\ The Board's bylaws implement Title I of the Act by establishing 
a principal office in Washington, DC, and by establishing the 
composition of a Governing Board and the powers and duties of the 
Governing

[[Page 44554]]

Board and officers. The bylaws are an important part of the Board's 
governing documents and establish procedures for the business operation 
and administration of the Board. The bylaws are intended to facilitate 
fulfillment of the Board's obligations under the Act.
---------------------------------------------------------------------------

    \4\ Section 101(b) of the Act.
---------------------------------------------------------------------------

IV. Conclusion

    On the basis of the foregoing, the Commission finds that the 
proposed rules are consistent with the requirements of the Act and are 
necessary and appropriate in the public interest and for the protection 
of investors.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Exchange Act, that the proposed rules (File No. PCAOB-2003-01) be and 
hereby are approved.

    By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 03-19178 Filed 7-28-03; 8:45 am]
BILLING CODE 8010-01-P