The regulator with a reputation for rigorous inspections of public company audit files is reducing its budget and the fee companies must pay to support the process.

The Public Company Accounting Oversight Board has approved a 2018 fiscal-year budget that shaved $8.6 million or 3.2 percent off its 2017 budget. The $259.9 million package for the coming year reduces the “accounting support fee” that public companies and broker-dealers pay to fund the activities of the PCAOB by a total of $32.6 million.

The total accounting support fee for 2018 will be $235.4 million; of that amount $205.4 million is allocated to pubic companies and the remainder to broker-dealers. The PCAOB regulates nearly 2,000 different registered audit firms, nearly half of which are located outside the United States. Almost 500 of those firms audit brokers and dealers rather than public companies.

The budget and support fee reductions for 2018 follow controversial increases the past few years. In 2017, the PCAOB’s budget increased 6 percent, which followed a 12-percent increase the year before that. The board faced some pressure both internally and from the Securities and Exchange Commission, which has final authority over the board’s budget and standards, to put a lid on cost increases.

When the SEC approved the board’s budget last year in a 2-1 vote, Commissioner Michael Piwowar made a point of calling out the increases and promising to hold the board accountable to some measures to better control costs in its 2018 budget. The SEC still must approve the board's current year budget before it will be final.

PCAOB member Steve Harris said the board achieved a reduced budget by decreasing its planned headcount. That involved “a reconsideration the mix of staff needed throughout the organization,” which led to the elimination of some vacant positions and the combining of some roles. The board also trimmed its travel budget and its planned spending on training, administrative expenses, facilities, and recruitment. The budget achieves fiscal responsibility “with no negative effect on the PCAOB’s ability to carry out its mission in 2018,” said Harris, the PCAOB member with the heaviest background in investor advocacy.

“The 2018 budget reflects significant efforts over the past year to identify opportunities for efficiency and develop and implement initiatives to test and achieve those efficiencies,” said PCAOB Chairman James Doty in his prepared remarks at the board’s open meeting to approve the budget. He thanked his staff for developing such initiatives to realize savings “without jeopardizing the PCAOB's ability effectively and efficiently to pursue its investor protection mission.”

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