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PCAOB Updates

 
Board Adopts Rules for Annual and Special Reporting

The Public Company Accounting Oversight Board today adopted 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 also may be required to report more frequently, to provide information specified by the Board. The reporting requirements in the new rules are the first such requirements adopted by the Board.

PCAOB Chairman Mark Olson said, "With today’s action, the Board is putting in place requirements that will ensure that fundamental information about each of the more than 1,800 firms registered with the PCAOB is kept up-to-date and that each firm promptly discloses certain significant events. With this foundation in place, the Board can also, in the future, add other reporting and disclosure obligations that may appropriately serve the public interest."

The reporting framework includes two types of reporting obligations. First, each registered firm must annually provide basic information about the firm and the firm's issuer-related practice over the most recent 12-month period. Information to be reported annually includes, among other things, information about audit reports issued by the firm during the year, certain disciplinary history information about persons who have joined the firm, and information about fees billed to issuer audit clients, in various categories of services, as a percentage of the firm’s total fees billed.

Second, the rules and forms adopted by the Board identify certain events that, if they occur with respect to a registered firm, must be reported by the firm within 30 days. These reportable events range from such things as a change in the firm’s name or contact information to the institution of certain types of legal, administrative, or disciplinary proceedings against a firm or certain categories of individuals.

The Board will make each firm’s annual and special reports available to the public on the Board’s Web site, subject to exceptions for information that satisfies specified criteria for confidential treatment.

The Board will submit the rules to the Securities and Exchange Commission for approval. The rules will take effect 60 days after Commission approval. Beginning then, firms will be subject to the special reporting obligations, with the earliest potential special reporting deadline for any firm being 90 days after Commission approval. For all firms, the first annual report will be due by June 30, 2009, for the 12-month period ending March 31, 2009.

The Board plans to publish guidance for firms relating to compliance with the reporting requirements and interaction with the Board’s new Web-based system for reporting.

The Board’s release adopting the rules, along with the text of the rules and the instructions to Form 2 (used for annual reporting) and Form 3 (used for special reporting) can be found on the Board’s Web site, www.pcaobus.org, on the Rulemaking Docket under Rules (Docket Matter No. 019). An archive of the Webcast of the Board’s Open Meeting will be available on the Board's Web site, on the Webcasts page.