The Public Company Accounting Oversight Board today published two lists: a list of registered firms that have not yet been inspected by the PCAOB, even though more than four years have passed since the end of the calendar year in which the firm first issued an audit report while registered with the Board; and an updated list of jurisdictions in which the Board has conducted inspections of registered non-U.S. firms. In addition, the Board today reported its progress on meeting its 2009 target for the inspection of certain non-U.S. firms eligible to be deferred, pursuant to a recent Board rule amendment. These disclosures provide transparency about aspects of the Board's inspection program, including progress with respect to international inspections.
List of Firms
The Board previously announced its intention to publish the new list of certain firms that have not yet been inspected in two recent releases: PCAOB Release No. 2009-003, Final Rule Concerning the Timing of Certain Inspections of Non-U.S. Firms, and Other Issues Relating to Inspections of Non-U.S. Firms (June 25, 2009), issued in connection with the Board’s adoption of PCAOB Rule 4003(g); and PCAOB Release No. 2008-007, Rule Amendments Concerning the Timing of Certain Inspections of Non-U.S. Firms, and Other Issues Relating to Inspections of Non-U.S. Firms (Dec. 4, 2008), issued in connection with the Board’s adoption of PCAOB Rule 4003(f).
The delay in conducting the first inspection of these firms is consistent with the Board’s rules. Rule 4003(f) extended from 2008 to 2009 the deadline for the first inspection of certain registered non-U.S. firms. Rule 4003(g), if approved by the Securities and Exchange Commission, would give the Board the ability to postpone, for up to three years, the first inspection of any registered foreign public accounting firm that the Board is otherwise required to conduct before the end of 2009 and that is in a jurisdiction in which the Board did not conduct an inspection prior to 2009.
The Board noted that inclusion on the list of firms published today should not be construed to support any positive or negative inferences about the quality of the audit work of any firm on the list, nor about its systems, policies, procedures, practices or conduct, or about the strength of its home-country oversight system. Similarly, this list should not be construed as supporting any positive or negative inferences about the reasons for a firm’s inclusion on the list.
This list of firms will be updated periodically as events occur, such as the commencement of inspections.
Updated List of Jurisdictions
The Board also published today an updated list of jurisdictions in which there are one or more registered non-U.S. firms that the Board has inspected. As indicated by that list, as of July 31, 2009, the Board has conducted inspections of non-U.S. firms in 27 jurisdictions.
This list was first published on April 7, 2009. In the future, the Board plans to update the list of jurisdictions on a semiannual basis, to reflect information current as of June 30 and December 31.
Progress on Inspections of Non-U.S. Firms
As of December 31, 2008, the PCAOB had completed 128 foreign inspections. In 2009, the Board contemplates conducting an additional 82 non-U.S. inspections. As of July 31, 2009, the PCAOB has conducted 19 of these 2009 non-U.S. inspections and has confirmed the timing for an additional 19 inspections.
Consistent with the Board’s statements in PCAOB Release No. 2009-003, the Board today also announced the progress it has made toward the thresholds described in that release with respect to the inspection of firms subject to Rule 4003(g). As noted above, Rule 4003(g) permits the Board to defer for up to three years the first inspection of certain non-U.S. firms otherwise required to be inspected in 2009. In Release 2009-003, the Board stated that, notwithstanding Rule 4003(g), it intended to inspect at least four firms subject to deferral under that rule before the end of 2009. The Board further stated that these 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 subject to Rule 4003(g).
To date, the Board has inspected two of the four firms. The market capitalization of these two firms constitutes approximately 2 percent of the aggregate U.S. market capitalization of the audit clients of all firms subject to Rule 4003(g).
Going forward, the Board will update this progress report semiannually, to reflect information current as of June 30 and December 31.
Future updates to the lists and inspection progress information in this release will be made public on the Board’s Web site and through the PCAOB listserv.