The Public Company Accounting Oversight Board has adopted rules and a related form to govern when a firm would be allowed to succeed to the registration status of a predecessor firm following a merger or other change in the registered firm's legal status.
To become registered with the PCAOB, a public accounting firm has traditionally filed an application for registration on PCAOB Form 1, which the board may approve or disapprove. The new rules and form (PCAOB Form 4) adopted by the PCAOB identify the circumstances in which the registration status of a registered firm may continue in effect even after the firm's legal form has changed or the firm has combined with another firm, without the new legal entity needing to apply for registration on Form 1.
"Today's action will allow for registered firms -- in appropriate and well-defined circumstances - to provide audit services without a break in their PCAOB registration status when there has been some change in their legal form," said PCAOB Chairman Mark Olson (pictured) in a statement. "The rules would provide flexibility that is important given the serious implications of a firm operating without registration."
Succession through the Form 4 mechanism is an option available to a firm where the change involving the firm satisfies specified criteria. When those criteria are not satisfied, registration would remain available only through the Form 1 application process. The PCAOB will submit the rules to the Securities and Exchange Commission for approval. The rules will take effect 60 days after the SEC approves them.
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