The Public Company Accounting Oversight Board (PCAOB) has approved its 2006 budget of $128 million. The accounting industry regulatory agency will use a $19 million excess from a 2005 budget to reduce the 2006 accounting support fee paid by publicly traded companies according to Reuters.
Accounting support fee assessments of $109.3 million are projected for 2006 while $136.1 million in fees were assessed in 2005 according to the Compliance Reporter. The approved budget has been passed onto the Securities and Exchange Commission (SEC) for final approval according to Reuters. The SEC supervises the PCAOB.
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In addition to lower accounting support fees, the PCAOB expects to increase its headcount to 537 employees, including up to 280 inspectors. Their current projected 2005 headcount is 427, with a total inspection staff of 200. Other budget expense items reflected in the new budget include staff training, significant travel, and the maintenance of seven offices other than the Board's Washington, DC headquarters.
The PCAOB is mandated to oversee auditors of public companies under the Sarbanes-Oxley Act of 2002. Currently 1,586 public accounting firms are registered with the PCAOB and 640 of those are located outside of the U.S., according to the PCAOB's prepared statement. Annual inspections are required of firms with more than 100 public company clients while those firms with 100 or fewer public company clients are inspected every three years.
Technical amendments were also adopted including an ethics rule (Rule 3502) that codifies the principle that persons associated with a registered accounting firm should not cause the firm to violate relevant laws, rules, and standards according to the PCAOB's prepared statement. After discussions with the SEC, the word âcauseâ was removed from the title and text of this rule to avoid any misperceptions.
The effective dates in certain rules were revised to allow reasonable time for affected firms to prepare engagements covered by the rules in a professional manner according to the PCAOB's prepared statement. Other amendments were approved excluding audit firms from selling certain forms of tax consulting services to audit clients.
In other PCAOB news, Chairman William McDonough stepped down on November 30 according to Reuters. The SEC is searching for a successor for McDonough who managed the Board through its startup and first inspections.