The Public Company Accounting Oversight Board voted today to propose rules for annual and special reporting of information and events by accounting firms that are registered with the PCAOB.
Section 102(d) of the Sarbanes-Oxley Act of 2002 provides that each registered public accounting firm shall submit an annual report to the Board, and may also be required to report more frequently, to provide information specified by the Board or the Securities and Exchange Commission.
The reporting framework proposed by the Board includes two types of reporting obligations. First, the proposal would require each registered firm to provide basic information once a year about the firm and the firm's issuer-related practice over the most recent 12-month period. Second, the proposal identifies certain events that, if they occur with respect to a registered firm, must be reported by the firm within 14 days.
The Board also voted to propose rules that, in certain circumstances, would allow a successor firm to succeed to the registration status of a predecessor firm following a merger or other change in the registered firm's legal form.
The rules are intended to minimize disruption of a firm’s registration because registration is essential to a firm’s ability lawfully to audit issuers, and an issuer's compliance with federal law and regulations depends upon its auditor being registered with the PCAOB.
The proposed rules would allow a firm to succeed outright to a predecessor's registration in certain circumstances without any disruption in registration status. In other circumstances, the proposed rules would allow for temporary succession for a transitional period of up to 90 days while the firm seeks registration.
The Board will seek comments on the proposed rules for 60 days and will carefully consider all comments received. Following the close of the comment period on July 24, 2006, the Board will determine whether to adopt final rules, with or without amendments. Any final rules adopted will be submitted to the SEC for approval.
The text of the rules can be found on the Board’s Web site, www.pcaobus.org, on the Rulemaking Docket under Rules.