PCAOB Final Registration: Pool of Public Audit Firms Shrinks by 45%
The Public Company Accounting Oversight Board has reviewed and approved registration applications from 598 public accounting firms to provide audit services to public companies. The final list of of approved firms can be found at http://www.pcaobus.org/ApprovedRegistrantsList.pdf.
Last year, approximately 850 CPA firms performed audits of at least one public company, and about 1,100 firms (which includes the 850) retained the training and credentials to perform public company audits had the opportunity arisen. The final number approved by the PCAOB represents a drop of approximately 45% in the total pool of firms eligible to audit listed companies next year.
The Sarbanes-Oxley Act of 2002 and the Board's rules require the registration of all public accounting firms that issue or prepare audit reports on U.S. public companies, or that play a substantial role in the preparation of such audit reports. Beginning today, U.S. public accounting firms must be registered with the Board in order to engage in that work.
"Registration is a prerequisite for accounting firms to continue their work as auditors of public companies," said PCAOB Chairman William J. McDonough. "It is also the foundation, established in the Sarbanes-Oxley Act, for the PCAOB to perform its important functions of inspection and enforcement."
To facilitate inspection, the PCAOB will establish regional offices in the Atlanta, Dallas and San Francisco areas. Inspectors are currently based in the PCAOB offices in Washington, D.C., and New York City.
"Inspection is one of the strongest tools we have to see that accounting firms fulfill the expectations of the Sarbanes-Oxley Act," McDonough said. "Regular inspections will occur every year for firms with more than 100 audit clients. Other firms will be inspected once every three years. And when the Board thinks circumstances warrant, we can order a special inspection, regardless of timing."
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