Washington (July 17, 2003) -- It's official -- U.S. accounting firms must register with the Public Company Accounting Oversight Board by October 22, or they will be barred from auditing public companies.
The Securities and Exchange Commission approved the oversight board's proposed registration rules on Wednesday, despite grumbling from the American Institute of CPAs and the six largest accounting firms about the amount of information they'd need to give the PCAOB, and other issues about confidentiality and fee disclosure.
The SEC also approved the registration of non-U.S. accounting firms -- which was hotly contested overseas -- but foreign firms were given an extended deadline to register and face significantly different requirements than their counterparts in the U.S.
"This is a seminal event for the PCAOB," said Board Chairman William J. McDonough in a statement. "Registration is the underpinning of the Board’s duties to oversee and inspect public accounting firms, as well as the Board’s duty to enforce the auditing standards that will help restore public confidence in financial reporting."
In its order approving the proposed rules, the SEC said it had received 16 comment letters, seven from major accounting firms and the SEC Practice Section of the AICPA, one from the National Association of State Boards of Accountancy, and eight from foreign governments and professional groups.
The SEC noted lingering concerns over whether the board intended to cross from simple registration into oversight of non-U.S. firms, but said it "applauded the board's initiative to work with its foreign counterparts to find ways to accomplish the goals of the Act without subjecting foreign firms to unnecessary burdens or conflicting requirements."
It also dismissed the concerns of U.S. entities by stating that Sarbanes-Oxley mandated the registration system be put into place promptly. "After careful review of the board's proposed registration system, the Commission finds that it is consistent with the requirements of the Act and the securities laws and is necessary and appropriate in the public interest and for the protection of investors."
CPA and accounting firm consultant Steve Erickson said the SEC action will have a catalyst effect on mid-sized firms with a small number of SEC clients.
"I think it's probably going to push the decision time up to either do the work or not do the work anymore," he said. "A number of firms will be quickly evaluating whether or not this is where they want to spend their money and resources."
To read the SEC Order Approving PCAOB Registration Rules, click here:
-- Tracey Miller-Segarra
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