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Accounting Support Fee 

The largest source of funding for the PCAOB comes from the companies whose financial statements must be audited by PCAOB-registered firms. Section 109 of the Sarbanes-Oxley Act, as amended by the Dodd-Frank Act, requires funds to cover the PCAOB's annual budget, less registration and annual fees, to be collected from "issuers," as defined in the Sarbanes-Oxley Act, and from brokers and dealers registered with the Securities and Exchange Commission (SEC). The amount due from issuers, brokers, and dealers is referred to as the Board's "accounting support fee." The Board's budget and accounting support fee are approved annually by the SEC.

On June 14, 2011, the Board approved amendments to its funding rules related to the equitable allocation, assessment, and collection of the accounting support fee to be paid by brokers and dealers. The amendments also included revisions to the Board's funding rules related to the allocation, assessment, and collection of the accounting support fee paid by issuers. The amendments were approved by the SEC on August 18, 2011. Beginning in 2011, the Board's budget separately listed the accounting support fee to be assessed to issuers and to brokers and dealers.

In establishing rules on the allocation of the accounting support fee, the Board was guided by two overarching principles:

  • The fee must be allocated in a manner that reflects the proportionate sizes of issuers, brokers, and dealers.
  • The fee must be allocated in an equitable manner.

These two principles are generally related because the size of an entity may serve as an indication of the complexity of an audit, which could be an equitable measure on which to base the allocation of the fee.

For issuers, failure to pay an allocated share of the accounting support fee constitutes a violation of the Securities Exchange Act of 1934. The Board may report nonpayment of the fee by issuers, brokers, and dealers to the SEC, and in the case of brokers and dealers, to the broker's or dealer's designated examining authority.

Issuers

Once each year, issuers are allocated a share of the issuer accounting support fee based on their average, monthly U.S. equity market capitalization or net asset value. Under the amended rules, generally, equity companies with average, monthly U.S. equity market capitalization of more than $75 million and investment companies with average, monthly net asset value or U.S. equity market capitalization of more than $500 million may be assessed a share of the fee.  

Brokers and Dealers

Under the amended rules, brokers and dealers are allocated a share of the broker-dealer accounting support fee based on their average, quarterly tentative net capital. Generally, brokers and dealers with average, quarterly tentative net capital of greater than $5 million may be assessed a share of the fee.

The initial allocation, assessment, and collection of the accounting support fee for brokers and dealers took place at year-end of 2011.