Order Approving Public Company Accounting Oversight Board Budget and Annual Accounting Support Fee for Calendar Year 2022

CourtSecurities And Exchange Commission
Citation86 FR 72300
Record Number2021-27529
Publication Date21 December 2021
Federal Register, Volume 86 Issue 242 (Tuesday, December 21, 2021)
[Federal Register Volume 86, Number 242 (Tuesday, December 21, 2021)]
                [Notices]
                [Pages 72300-72301]
                From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
                [FR Doc No: 2021-27529]
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                SECURITIES AND EXCHANGE COMMISSION
                [Securities Act of 1933 Release No. 33-11014/December 15, 2021;
                Securities Exchange Act of 1934 Release No. 34-93785/December 15, 2021]
                Order Approving Public Company Accounting Oversight Board Budget
                and Annual Accounting Support Fee for Calendar Year 2022
                 The Sarbanes-Oxley Act of 2002, as amended (the ``Sarbanes-Oxley
                Act''),\1\ established the Public Company Accounting Oversight Board
                (``PCAOB''
                [[Page 72301]]
                or the ``Board'') to oversee the audits of companies that are subject
                to the securities laws, and related matters, in order to protect the
                interests of investors and further the public interest in the
                preparation of informative, accurate, and independent audit reports.
                Section 982 of the Dodd-Frank Wall Street Reform and Consumer
                Protection Act (the ``Dodd-Frank Act'') \2\ amended the Sarbanes-Oxley
                Act to provide the PCAOB with explicit authority to oversee auditors of
                broker-dealers registered with the Securities and Exchange Commission
                (the ``Commission''). The PCAOB is to accomplish these goals through
                the registration of public accounting firms, standard setting,
                inspections, and investigation and disciplinary programs. The PCAOB is
                subject to the comprehensive oversight of the Commission.
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                 \1\ 15 U.S.C. 7201 et seq.
                 \2\ Public Law 111-203, 124 Stat. 1376 (2010).
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                 Section 109 of the Sarbanes-Oxley Act provides that the PCAOB shall
                establish a reasonable annual accounting support fee, as may be
                necessary or appropriate to establish and maintain the PCAOB. Under
                Section 109(f) of the Sarbanes-Oxley Act, the aggregate annual
                accounting support fee shall not exceed the PCAOB's aggregate
                ``recoverable budget expenses,'' which may include operating, capital,
                and accrued items. The PCAOB's annual budget and accounting support fee
                are subject to approval by the Commission. In addition, the PCAOB must
                allocate the annual accounting support fee among issuers and among
                brokers and dealers.
                 Section 109(b) of the Sarbanes-Oxley Act directs the PCAOB to
                establish a budget for each fiscal year in accordance with the PCAOB's
                internal procedures, subject to approval by the Commission. Rule 190 of
                Regulation P (the ``Budget Rule'') governs the Commission's review and
                approval of PCAOB budgets and annual accounting support fees.\3\ The
                Budget Rule provides, among other things, a timetable for the
                preparation and submission of the PCAOB budget and for Commission
                actions related to each budget, a description of the information that
                should be included in each budget submission, limits on the PCAOB's
                ability to incur expenses and obligations except as provided in the
                approved budget, procedures relating to supplemental budget requests,
                requirements for the PCAOB to provide on a quarterly basis certain
                budget-related information, and a list of definitions that apply to the
                rule and to general discussions of PCAOB budget matters.
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                 \3\ 17 CFR 202.190.
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                 In accordance with the Budget Rule, in March 2021 the PCAOB
                provided the Commission with a narrative description of its program
                issues and outlook for the 2022 budget year. In response, the
                Commission provided the PCAOB with economic assumptions and general
                budgetary guidance for the 2022 budget year. The PCAOB subsequently
                delivered a preliminary budget and budget justification to the
                Commission. Staff from the Commission's Office of the Chief Accountant
                and Office of Financial Management dedicated a substantial amount of
                time to the review and analysis of the PCAOB's programs, projects, and
                budget estimates and participated in several meetings with staff of the
                PCAOB to further develop the understanding of the PCAOB's budget and
                operations. During the course of this review, Commission staff relied
                upon representations and supporting documentation from the PCAOB. Based
                on this review, the Commission issued a ``passback'' letter to the
                PCAOB on October 29, 2021. On November 23, 2021, the PCAOB adopted its
                2022 budget and accounting support fee during an open meeting, and
                subsequently submitted that budget to the Commission for approval.
                 After considering the above, the Commission did not identify any
                proposed disbursements in the 2022 budget adopted by the PCAOB that are
                not properly recoverable through the annual accounting support fee, and
                the Commission believes that the aggregate proposed 2022 annual
                accounting support fee does not exceed the PCAOB's aggregate
                recoverable budget expenses for 2022.
                 Given the change in leadership of the PCAOB and potential changes
                to its priorities for 2022 and beyond, the Commission requests the
                PCAOB to perform an assessment of the PCAOB Strategic Plan by June 30,
                2022 and provide the Commission staff with a report detailing the
                results of the assessment.
                 The Commission continues to emphasize the importance of the PCAOB's
                identification of efficiencies and process improvements. Accordingly,
                the Commission requests the Board evaluate its operational efficiency,
                improvements, and budgetary needs and submit such assessments to the
                Commission in connection with the 2023 budget cycle.
                 Continuing uncertainty surrounding the impact of COVID-19 on the
                PCAOB's operations reinforces the importance of continued coordination
                between the SEC and PCAOB. The Commission directs the PCAOB during 2022
                to continue to hold monthly meetings, as necessary, with the
                Commission's staff to discuss important policy initiatives, changes
                related to program areas, and significant impacts to the PCAOB's 2022
                budget, including significant differences between actual and budgeted
                amounts and anticipated cost-savings. Separately, the Commission
                requests the PCAOB to continue its written quarterly updates on recent
                activities, including strategic initiatives, for the PCAOB's Office of
                Economic and Risk Analysis, Office of Data, Security, and Technology,
                and Division of Registration and Inspections. The Commission expects
                the PCAOB Board to make itself available to meet with individual
                Commissioners on these and other topics. Further, the Commission
                requests that the PCAOB submit its 2021 annual report to the Commission
                by March 31, 2022.
                 The Commission understands that the Office of Management and Budget
                (``OMB'') has determined that the 2022 budget of the PCAOB is subject
                to sequestration under the Budget Control Act of 2011.\4\ For 2021, the
                PCAOB sequestered $16.4 million. That amount will become available in
                2022. For 2022, the sequestration amount will be 5.7% or $17.7 million.
                Consequently, we expect the PCAOB will have approximately $1.3 million
                less funds available from the 2021 sequestration for spending in 2022.
                Accordingly, the PCAOB decreased its accounting support fee for 2022 by
                approximately $1.3 million.
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                 \4\ OMB Report to the Congress on the Joint Committee Reductions
                for Fiscal Year 2021, February 10, 2020, available at https://www.whitehouse.gov/wp-content/uploads/2020/02/JC-sequestration_report_FY21_2-10-20.pdf.
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                 The Commission has determined that the PCAOB's 2022 budget and
                annual accounting support fee are consistent with Section 109 of the
                Sarbanes-Oxley Act. Accordingly,
                 It is ordered, pursuant to Section 109 of the Sarbanes-Oxley Act,
                that the PCAOB budget and annual accounting support fee for calendar
                year 2022 are approved.
                 By the Commission.
                Vanessa A. Countryman,
                Secretary.
                [FR Doc. 2021-27529 Filed 12-20-21; 8:45 am]
                BILLING CODE 8011-01-P
                

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