Washington, D.C., June 30, 2003
The Public Company Accounting Oversight Board today adopted final rules governing the Board's ethical conduct. The purpose of the Ethics Code is to ensure the highest standards of ethical conduct, and to provide the public with confidence in the objectivity of the Board's decisions by seeking to avoid both actual and perceived conflicts of interests.
The rules will be submitted to the SEC for approval. Pursuant to Section 107 of the Sarbanes-Oxley Act, Board rules do not take effect unless approved by the Commission.
The Code consists of fourteen sections (EC1 through EC14). The Board's adopting release, which will contain the full text of the Ethics Code, will be posted to the PCAOB Web site, www.pcaobus.org, as soon as possible.
The Code will apply to the Board members and staff, as well as to designated contractors and consultants. In some circumstances, spouses, spousal equivalents, and dependents will either be subject to the Code, or impact the obligation of the Board member or staff under the Code.
In summary, the Code provides that:
Certain restrictions in the Ethics Code apply only to "professional" staff (i.e., those who are exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act (29 USC § 201 et seq.)). These include restrictions on financial interests, acceptance of gifts or honoraria, speaking engagements, and post-employment activities, as well as provisions requiring recusal.
The term "designated contractors and consultants" means those persons or business organizations with whom the Board enters into contracts for services, whom the Board determines should be subject to the Code, and for which the contract contains a provision expressly incorporating this Code (in whole or in part). The Board will maintain a list of designated contractors and consultants, which will be available to the public, and may contractually impose additional restrictions or limitations. Pursuant to Rule 3700, Board advisory group members must also comply with certain provisions of the Ethics Code.
A Proposed Ethics Code was released for public comment on April 18, 2003 and the Board received eight written comment letters. In response to these comments, the Board has clarified and modified certain aspects of the initial proposal. Most importantly, the revisions to the original proposal would –