The Securities and Exchange Commission has approved a 2016 budget for the Public Company Accounting Oversight Board of $257.7 million, a 3 percent increase over last year, and a 12 percent increase in the accounting support fee to $253.3 million.
The extra money in the budget will come from under-spending last year that will be available to fund the 2016 budget.
About $220.9 million of the $253.3 million accounting support fees will be assessed on public companies, and $32.4 million will be assessed on broker-dealers.
“The PCAOB’s work to oversee auditors of public companies and SEC registered broker-dealers is critical to investor protection and our markets,” said SEC Chair Mary Jo White in a statement. “The PCAOB has another busy year ahead as it continues to conduct inspections of auditors and broker-dealers, works to develop its permanent broker-dealer audit inspection program, and advances numerous standard-setting initiatives. The Commission must continue to make sure the PCAOB has the necessary funds to fulfill all aspects of its important mission.”
The 2016 budget includes an increase of about 3 percent from the PCAOB’s 2015 budget of $250.9 million and is approximately 5 percent over its estimated $244.9 million in spending in 2015. The 2016 accounting support fee of $253.3 million is approximately 12 percent higher than the 2015 accounting support fee of $226.6 million. The SEC noted that the increase in the accounting support fee relative to the increase in the budget reflects the fact that there is less unused funding to be carried forward from FY 2015 to offset FY 2016 budgeted expenditures than was the case last year.
PCAOB chairman James Doty told the SEC that the PCAOB’s work was needed. “Pressures and incentives for auditors to cut corners remain a concern and threaten to undermine our efforts and investor protection,” he said during a meeting Monday. “At the same time that we protect investors’ interests in striving to achieve more reliable audits, we also need to consider how to strengthen the audit’s value to stakeholders. The needs of both markets and investors change. We must advance the audit process to meet those needs. The audit should not become a perfunctory compliance exercise but should be a living, breathing, and disciplined process that safeguards investors.”
Doty noted that warning signs abound. “Companies’ use of unaudited and non-GAAP metrics proliferate,” he said. “In the extreme, we have seen examples where companies dismiss auditors soon after the disclosure of internal control material weakness findings, with no adverse market reaction. This leads even the profession’s most outspoken advocates to question whether the pass/fail audit has become a commodity that does not matter to investors.”
