[Federal Register Volume 70, Number 45 (Wednesday, March 9, 2005)]
[Notices]
[Pages 11720-11721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-982]


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SECURITIES AND EXCHANGE COMMISSION

[Securities Act of 1933, Release No. 8550/ March 3, 2005 and Securities 
Exchange Act of 1934, Release No. 51313/ March 3, 2005]


Order Approving Public Company Accounting Oversight Board Revised 
Budget and Annual Accounting Support Fee for Calendar Year 2005

    The Sarbanes-Oxley Act of 2002 (the ``Act'') established the Public 
Company Accounting Oversight Board (``PCAOB'') to oversee the audits of 
public companies and related matters, to protect investors, and to 
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. Section 109 of the 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. Section 109(h) amends Section 13(b)(2) of the Securities 
Exchange Act of 1934 to require issuers to pay the allocable share of a 
reasonable annual accounting support fee or fees, determined in 
accordance with Section 109 of the Act. Under Section 109(f), the 
aggregate annual accounting support fee shall not exceed the PCAOB's 
aggregate ``recoverable budget expenses,'' which may include operating, 
capital and accrued items. Section 109(b) of the 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.
    The PCAOB originally adopted a budget for calendar year 2005 and 
submitted it to the Commission in October 2004. After further review of 
its proposed expenditures for 2005, the PCAOB adopted a revised budget 
for calendar year 2005 and submitted that budget to the Commission for 
approval on January 6, 2005. In its supporting materials, the PCAOB 
noted that the revised budget ``supports its mission to oversee the 
auditors of public companies in order to protect the interests of 
investors and further the public interest in the preparation of 
informative, fair and independent audit reports. This includes carrying 
out the

[[Page 11721]]

PCAOB's core functions of registration, inspection, enforcement, and 
standards-setting.''
    In accordance with its responsibilities to oversee the PCAOB, the 
Commission reviewed both the original and revised budgets filed by the 
PCAOB for 2005 and its aggregate accounting support fee for 2005, which 
will fund the PCAOB's expenditures. During the course of the 
Commission's review, among other things, the Commission staff reviewed 
and relied upon representations and supporting documentation from the 
PCAOB.
    The Commission did not identify any proposed disbursements in the 
revised budget that are not properly recoverable through the annual 
accounting support fee, and the Commission believes that the revised 
aggregate proposed 2005 annual accounting support fee does not exceed 
the PCAOB's aggregate recoverable budget expenses for 2005.
    The Commission recognizes that the PCAOB is continuing to develop 
its infrastructure and will be increasing its staffing levels 
significantly in 2005 in order to fulfill its responsibilities under 
the Act. However, during the next budget cycle, the PCAOB will have 
substantially completed its start-up activities and finished a full 
year of inspections, including inspections of the eight largest 
registered public accounting firms and a number of smaller registered 
public accounting firms. As the PCAOB already has agreed, prior to the 
Commission's review of the 2006 PCAOB budget, the Commission expects to 
have received: (i) The PCAOB's long-range strategic plan for its 
operations and budget, (ii) a self-assessment of its internal controls 
for its operations and budget, and (iii) a briefing regarding the 
Commission's initial inspection of the PCAOB, as contemplated by 
Section 107(a) of the Act, in order to enable the Commission to assess 
whether the PCAOB is fulfilling its statutory responsibilities. Because 
of the specialized subject matter of the PCAOB's operations, we expect 
that the Commission's examinations of the PCAOB will draw on the 
expertise of several offices within the Commission, including the 
Office of Compliance, Inspections and Examinations and the Office of 
the Chief Accountant. Together, these offices will ensure that the 
Commission's examinations of the PCAOB are tailored to its specific 
operations.
    Based on the foregoing, the Commission has determined that the 
PCAOB's revised 2005 budget and annual accounting support fee are 
consistent with Section 109 of the Act. Accordingly,
    It is ordered, pursuant to Section 109 of the Act, that the PCAOB 
budget and annual accounting support fee for calendar year 2005 are 
approved.

    By the Commission.
L. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5-982 Filed 3-8-05; 8:45 am]
BILLING CODE 8010-01-P