Washington (April 17, 2003) - The Public Company Accounting Oversight Board declared an abrupt end to self-regulation by the accounting profession by announcing its decision to develop auditing and other professional standards for public accounting firms — a role that is that currently performed by the American Institute of CPAs.
Although the Sarbanes-Oxley accounting reform law that created the PCAOB last year authorizes the board to “designate or recognize any professional group of accountants to propose new standards,” officials announced at a public meeting on April 16 that they have “determined not to exercise this authority.”
The accounting profession will not be frozen out of the standard setting process altogether, however. New procedures approved by the board at the meeting call for the creation of a new advisory committee to formulate these standards, and the accounting profession will be guaranteed a seat at the table.
Significantly, however, accountants will be only one of several voices advising PCAOB on the development of professional standards. Representatives from finance and the investment community will also be appointed to the 15-to-30-member advisory panel, and accountants will be limited to no more than one-third of the membership of this new group.
Also at the meeting, the board officially voted to fund itself through annual fees on companies and mutual funds.
Under the plan, companies with more than $25 million of average monthly market capitalization will pay fees to fund the board's operations. Meanwhile, mutual funds exceeding $250 million in NAV (net asset value) also will be charged, however at rates lower than corporations.
-- Ken Rankin
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