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 Allocation of the Accounting Support Fee Among Issuers and Broker-Dealers

DATE: June 14, 2011
SPEAKER: Lewis H. Ferguson, Board Member
EVENT: PCAOB Open Board Meeting
LOCATION: Washington, DC

I support the adoption of the final rules and amending the existing PCAOB funding rules relating to the equitable allocation of the accounting support fee among issuers and SEC registered non-public broker-dealers.

The final rules provide for an equitable allocation and assessment among brokers and dealers of an appropriate portion of the accounting support fee established under the Sarbanes-Oxley Act, and as amended by the Dodd-Frank Act. Specifically, the final rules allocate a portion of the accounting support fee among brokers and dealers, establish classes of brokers and dealers for funding purposes, describe the methods for allocating the appropriate portion of the accounting support fee to each broker and dealer within each class, and address the collection of the assessed share of the broker-dealer accounting support fee from brokers and dealers.

For funding purposes, one of the most important aspects of the final rules is the establishment of different classes of brokers and dealers. These classes allow the Board to allocate the broker-dealer accounting support fee to those brokers and dealers whose audits, due to their relative size and complexity, may require more Board time and resources during an inspection than other audits of brokers and dealers with relatively small and less complex operations. Specifically, the accounting support fee will only be allocated among brokers and dealers with average, quarterly tentative net capital of greater than $5 million. During the proposal process, the Office of Administration and Office of General Counsel staff researched and analyzed the net capital of brokers and dealers. The staff's thoughtful analysis resulted in the Board proposing that brokers and dealers with average, quarterly tentative net capital of less than or equal to $5 million should not be assessed an accounting support fee. The commenters supported the proposed allocation and the rules are being adopted today as proposed.

The final rules also amend the Board's existing rules for the allocation, assessment, and collection of the issuer accounting support fee. Specifically, the amendments include changing to the definition of issuer market capitalization and changing the descriptions of the existing classes of issuers, among others.

As I conclude my remarks, I would like to thank the organizations and individuals who took the time to comment on the Board's proposal. I also would like to thank Bob Burns, Nina Mojiri-Azad, and Annie Braswell for researching, analyzing and proposing a well balanced approach relating to allocating the accounting support fee among issuers, brokers, and dealers.

 

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