Section 1. General Provisions (Amended)

Rule 1001. Definitions of Terms Employed in Rules.  

This version of the rule will be effective for audits of financial statements for fiscal years ending on or after December 15, 2024. The current version of the rule can be found here.

          (p)(ii) Play a Substantial Role in the Preparation or Furnishing of an Audit Report  

          The phrase “play a substantial role in the preparation or furnishing of an audit report” means – 

(1)to perform material services that a public accounting firm uses or relies on in issuing all or part of its audit report, or
(2)to perform the majority of the audit procedures with respect to a subsidiary or component of any issuer, broker, or dealer, the assets or revenues of which constitute 20% or more of the consolidated assets or revenues of such issuer, broker, or dealer necessary for the lead auditor to issue an audit report.  

Note 1: For purposes of paragraph (1) of this definition, the term “material services” means services, for which the engagement hours or fees constitute 20% or more of the total engagement hours or fees, respectively, provided by the lead auditor in connection with the issuance of all or part of its audit report. The term does not include non-audit services provided to non-audit clients. 

Note 2: For purposes of paragraph (2) of this definition, the phrase “subsidiary or component” is meant to include any subsidiary, division, branch, office or other component of an issuer, broker, or dealer, regardless of its form of organization and/or control relationship with the issuer, broker, or dealer. 

Note 3: For purposes of determining “20% or more of the consolidated assets or revenues” under paragraph (2) of this Rule, this determination should be made at the beginning of the issuer's, broker's, or dealer's fiscal year using prior year information and should be made only once during the issuer's, broker's, or dealer's fiscal year. 

[Effective pursuant to SEC Release No. 34-48180, File No. PCAOB-2003-03 (July 16, 2003); SEC Release No. 34-72087, File No. PCAOB-2013-03 (May 2, 2014); and SEC Release No. 34-95488, File No. PCAOB-2022-001 (August 12, 2022)]