The Securities and Exchange Commission has unanimously approved the Public Company Accounting Oversight Board’s 2013 budget and the related annual accounting support fee that it charges to issuers and broker-dealers
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The PCAOB budget totals $245.6 million and will be funded primarily by the collection of an accounting support fee totaling $234 million. The annual support fee was mandated under the Sarbanes-Oxley Act of 2002.
“It is critical that the PCAOB has the resources it needs to get the job done,” said SEC chairman Elisse B. Walter in a statement. “This budget review and approval process allows the SEC to determine appropriate funding levels and ensure that funds collected from issuers and broker-dealers are used efficiently and effectively.”
The PCAOB oversees the audits and auditors of the financial statements that are filed by issuers, which are mostly publicly traded companies, and registered broker-dealers. The Sarbanes-Oxley Act, which established the PCAOB, provides the SEC with oversight responsibility over the PCAOB. This includes approving the PCAOB’s budget and accounting support fee annually.
Under Section 109 of the Sarbanes-Oxley Act, the PCAOB is required to establish, with the approval of the SEC, a reasonable accounting support fee to fund its operations. The fee is assessed annually on issuers and SEC-registered broker-dealers. Consideration of the budget for approval is one on the many ways in which the Commission exercises its oversight responsibilities of the PCAOB.
The PCAOB approved its 2013 budget and accounting support fee in November 2012 during an open meeting of the Board. That budget, which now has also been approved by the SEC, includes a proposed 2013 budget of $245.6 million, and a proposed 2013 accounting support fee totaling $234 million, including $207.5 million to be assessed on issuers, and $26.5 million to be assessed on broker-dealers.
However, the PCAOB may face budget cuts if Congress and the Obama administration cannot agree on a way to avoid the sequester, even though it is not funded directly by taxpayer revenue (see PCAOB and FASB Face Possible Budget Cuts from Sequester).
The PCAOB’s 2013 budget represents an increase of approximately 8 percent over its 2012 budget of $227.7 million. The increase is primarily attributable to an increase in the PCAOB’s audit inspections program, including additional staff to perform inspections of audits of SEC-registered broker-dealers (a class of audits overseen by the PCAOB as a result of the Dodd-Frank Act). The PCAOB also needs the additional staff to perform international inspections, and implement planned improvements to the PCAOB’s inspections program, including the reporting and processes for assessing quality control remediation efforts.
The 2013 budget will be funded mostly by the 2013 accounting support fee of $234 million, which is approximately 9 percent higher than the 2012 accounting support fee of $215 million.