(Bloomberg) The U.S. regulator that oversees corporate audits could face automatic spending cuts designed to reduce the federal budget deficit even though it receives no taxpayer funding.

The Public Company Accounting Oversight Board’s plans for implementing the automatic cuts, mandated in the 2011 Budget Control Act, will probably be discussed today at a meeting of the Securities and Exchange Commission, which is scheduled to consider the PCAOB’s proposed $245 million budget. The automatic spending cuts, known as sequester, are scheduled to take effect next month unless delayed by lawmakers.

The PCAOB could be required to cut spending by as much as 7.6 percent, or $18 million, according to a report the White House published in September. The PCAOB is subject to the cuts because its funding from fees assessed on companies it oversees are incorporated into the federal budget.

“It’s contrary to what Congress intended when they set up the PCAOB,” Daniel Goelzer, one of the regulator’s former board members, said in a phone interview yesterday. The board’s budget “does not draw on appropriated funds.”

The PCAOB, established by Congress in the Sarbanes-Oxley Act of 2002, oversees audits of publicly traded corporations and brokerage firms. It’s supported by annual fees charged to public companies and broker-dealers registered with the SEC.

This year, the board is seeking the SEC’s approval for $234 million in industry assessments.

FASB Cuts
Another SEC-supervised entity, the Financial Accounting Standards Board, also is subject to the automatic cuts. FASB collected $29.8 million in fees last year from public issuers of debt and equity securities.

“We have been informed by the Office of Management and Budget that the accounting support fees received by the Financial Accounting Standards Board are subject to sequestration,” Robert W. Stewart, FASB’s vice president for communications, wrote in an e-mail. “We are currently in discussions with the OMB as to how that decision may impact the FASB.”

Goelzer, now a partner at Baker & McKenzie in Washington, said the cuts risk affecting the PCAOB’s core inspection and enforcement duties. The board would try to avert that impact by slowing hiring and cutting discretionary travel, he said.

“I would think there would be ways they could handle it in the short run,” he said.