The Public Company Accounting Oversight Board today approved a budget of $103 million for the 2004 fiscal year, reflecting planned investments in information technology to support the Board's registration, annual reporting, inspections, and enforcement programs, in addition to a more than two-fold increase in personnel. The Board's budget supports its mission to oversee the auditors of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports.
To date in the Board's first fiscal year, the Board has developed, in-house, a sophisticated system for Web-based registration of public accounting firms and has registered 665 firms. In 2004, the Board intends to dedicate $26 million to information technology, including technology to build on its registration system to develop a Web-based system of annual reporting by registered firms. The Board will also allocate $4.4 million to personnel working on technology-related matters.
The investment in technology will also enable the Board to integrate the Board's registration system into the work of the Board's inspection staff in inspecting registered firms. Under the Sarbanes-Oxley Act of 2002 and the Board rules, the largest of those firms – those with more than 100 public company clients – must be inspected annually. Others must be inspected no less frequently than every three years.
The Board's planned 2004 information technology projects include developing a system to aid the inspection staff in identifying and analyzing risks in financial reporting and auditing and a system to aid the staff in tracking and evaluating information obtained in inspections. The inspection-related technology investment will support regional offices in New York, Atlanta, Dallas-Fort Worth, and the San Francisco area, as well as the Board's Washington, DC headquarters.
Salaries and benefits make up a significant portion of the budget given the labor intensive activities of the Board. The Board has hired and will continue to hire highly experienced professionals to support its mission to oversee the auditors of public companies. The PCAOB's 2004 budget includes $48 million for salaries and benefits. The Board expects the largest increase in staff to be in its inspections program, with close to 100 new inspectors projected for 2004.
The Board has dedicated $8.2 million for travel expenses primarily to support PCAOB inspectors performing their duties required by the Act.
The budget will be submitted to the Securities and Exchange Commission for approval, as required by Section 109(b) of the Sarbanes-Oxley Act. Pursuant to the Act, the Board's budget, less registration fees collected in 2003, will form the basis for the Board's annual assessment of accounting support fees on public companies.
The archived webcast of the meeting can be found here.