Public companies will notice an increase in the fees they pay to support the Public Company Accounting Oversight Board after the Securities and Exchange Commission approved a 9-percent increase in the fee to fund the PCAOB's 2013 operating budget.
The SEC approved a $245.6 million budget for the PCAOB for 2013, 8 percent higher than the board's 2012 budget of $227.7 million. The PCAOB budgeted for the increase primarily to bolster its inspection staffing. In approving the budget, SEC Chairman Elisse Walter acknowledged the PCAOB's budget could still be subject to automatic, across-the-board cuts under sequestration, if Congress fails to come up with a better plan by March 1 for reducing the federal deficit by $1.2 trillion. “I would expect that in the event that sequestration occurs and the PCAOB's 2013 budget is indeed affected, the PCAOB will work with the commission and commission staff as appropriate regarding implementation of sequestration,” she said.
With its additional funding, the PCAOB plans to perform more international inspections as it continues to gain access to an increasing number of overseas registered firms through agreements with regulators in other countries. The board also plans to implement improvements to its inspection program, including its assessment of quality control remediations and the reporting process, where long delays between the inspections and the final reporting are common. The board also needs additional staff to perform inspections of auditors of broker-dealers, a new category of audit firms over which the PCAOB gained authority under the Dodd-Frank Act.
In approving the budget for submission to the SEC in November, PCAOB Chairman James Doty said the new inspection staffing will allow the board to better evaluate global network firms' work at remediating identified quality control problems and to better support field inspections. “They will also allow us to issue more and timely summary public reports on insights and trends gleaned from inspections,” he said.
To fund a bigger budget, the PCAOB asked the SEC to approve an 8-percent inrease in the accounting support fee that it charges to public companies and broker-dealers whose external audit work is overseen by the PCAOB. Only $26.5 million of the total support fee will be assessed to broker-dealers, with public companies picking up $207.5 million of the total $234 million support fee.