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Progress in Meeting Rule 4003(g) Thresholds 

The Board is providing additional information here on its progress in meeting the target thresholds that it announced in adopting Rule 4003(g), which permitted the Board to defer, for up to three years, the first inspection of 49 non-U.S. firms that were otherwise required to be inspected in 2009. In adopting that rule, the Board stated that:

  • It intended to inspect at least four of those firms in 2009 and that the four firms would have combined issuer audit-client U.S. market capitalization equal to at least 35 percent of the aggregate U.S. market capitalization of the audit clients of all firms meeting the Rule 4003(g) criteria for deferral;
  • for 2010, it intended to inspect at least eleven more firms, and that the firms inspected in 2009 and 2010 would have combined issuer audit-client U.S. market capitalization equal to at least 90 percent of the aggregate U.S. market capitalization of the audit clients of all firms meeting the Rule 4003(g) criteria for deferral;
  • for 2011, it intended to inspect at least fourteen additional firms and that the firms inspected in 2009 through 2011 would have combined issuer audit-client U.S. market capitalization equal to at least 99.9 percent of the aggregate U.S. market capitalization of the audit clients of all firms meeting the Rule 4003(g) criteria for deferral; and
  • the Board would inspect the remaining firms in 2012.

As of December 31, 2012, the PCAOB had inspected nine of the 49 firms eligible for deferral pursuant to Rule 4003(g), including three firms inspected in the period from June 30, 2012 to December 31, 2012. The combined market capitalization of the clients of those nine inspected firms accounted for approximately 38 percent of the aggregate market capitalization of the audit clients of all firms meeting the Rule 4003(g) criteria for deferral. In addition, as of December 31, 2012, six other firms eligible for deferral pursuant to Rule 4003(g) had voluntarily deregistered from the PCAOB since the adoption of Rule 4003(g) in 2009. The combined market capitalization of the clients of those six firms accounted for approximately three percent of the aggregate market capitalization of the audit clients of all firms meeting the Rule 4003(g) criteria for deferral.