[Federal Register Volume 84, Number 247 (Thursday, December 26, 2019)]
[Notices]
[Pages 71024-71025]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27697]
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SECURITIES AND EXCHANGE COMMISSION
[Securities Act of 1933 Release No. 33-10735 / December 18, 2019;
Securities Exchange Act of 1934 Release No. 34-87785 / December 18,
2019]
Order Approving Public Company Accounting Oversight Board Budget
and Annual Accounting Support Fee for Calendar Year 2020
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. 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 Securities and Exchange Commission (the
``Commission''). 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 Commission.
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\1\ 15 U.S.C. 7201 et seq.
\2\ Public Law 111-203, 124 Stat. 1376 (2010).
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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
are subject to approval by the Commission. In addition, the PCAOB must
allocate the
[[Page 71025]]
annual accounting support fee among issuers and among brokers and
dealers.
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 governs 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
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 2019 the PCAOB
provided the Commission with a narrative description of its program
issues and outlook for the 2020 budget year. In response, the
Commission provided the PCAOB with economic assumptions and general
budgetary guidance for the 2020 budget year. The PCAOB subsequently
delivered a preliminary budget and budget justification to the
Commission. Staff from the Commission's Office of the Chief Accountant
and Office of Financial Management dedicated a substantial amount of
time to the review and analysis of the PCAOB's programs, projects, and
budget estimates and attended several meetings with staff of the PCAOB
to further develop the 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 ``passback'' letter to the
PCAOB on October 31, 2019. On November 19, 2019, the PCAOB adopted its
2020 budget and accounting support fee 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 2020 budget adopted by the PCAOB that are
not properly recoverable through the annual accounting support fee, and
the Commission believes that the aggregate proposed 2020 annual
accounting support fee does not exceed the PCAOB's aggregate
recoverable budget expenses for 2020.
The Commission directs the PCAOB during 2020 to schedule monthly
meetings, as needed, with the Commission's staff about the
transformation initiatives that are expected to have a significant
impact on the 2021 PCAOB budget, including significant differences
between actual and budgeted amounts, and anticipated cost savings.
Separately, the Commission directs the PCAOB to continue its written
quarterly updates on recent activities, including transformation
initiatives, for the PCAOB's Office of Economic and Risk Analysis,
Office of Information Technology, and Division of Registration and
Inspections. The PCAOB Board will make itself available to meet with
the Commissioners on these and other topics. The PCAOB should also
submit its 2019 annual report to the Commission by March 30, 2020.
The Commission understands that the Office of Management and Budget
(``OMB'') has determined that the 2020 budget of the PCAOB is subject
to sequestration under the Budget Control Act of 2011.\4\ For 2019, the
PCAOB sequestered $17.0 million. That amount will become available in
2020. For 2020, the sequestration amount will be 5.9% or $16.8 million.
Consequently, we expect the PCAOB will have approximately $0.2 million
in excess funds available from the 2019 sequestration for spending in
2020. Accordingly, the PCAOB has reduced its accounting support fee for
2020 by approximately $0.2 million.
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\4\ See ``OMB Report to the Congress on the Joint Committee
Reductions for Fiscal Year 2020,'' March 18, 2019, Appendix, pg. 16
of 17 available at https://www.whitehouse.gov/wp-content/uploads/2019/03/2020_JC_Sequestration_Report_3-18-19.pdf.
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The Commission has determined that the PCAOB's 2020 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 2020 are approved.
By the Commission.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2019-27697 Filed 12-23-19; 8:45 am]
BILLING CODE 8011-01-P