PCAOB Adopts Rule Amendment To Enhance the Usefulness of Audit Firm Registration Information

The Public Company Accounting Oversight Board (PCAOB) today adopted a rule amendment to advance the PCAOB’s investor-protection mission and to enhance the Board’s registration program.

Specifically, the amendment enables the Board to address situations in which a registered firm has ceased to exist, is nonoperational, or no longer wishes to remain registered, as demonstrated by its failures to file annual reports (via PCAOB Form 2) and pay annual fees for at least two consecutive reporting years.

Through Form 2, registered firms provide the PCAOB with critical information, including each audit client for which that firm issued any audit reports during a reporting period. As of August 31, 2024, 80 registered firms have not filed annual reports and have not paid annual fees for both the 2022 and 2023 reporting years. Such delinquencies hinder the PCAOB’s ability to:

• Maintain an accurate list of registered firms that wish to maintain their registrations;
• Ensure that Form 2 information is being reported to the public;
• Collect mandatory annual fees; and
• Use PCAOB staff time and resources efficiently.

“The amendment adopted today will not only make registration information more useful for investors, audit committees, and other stakeholders, it will also improve the efficiency and effectiveness of our organization,” said PCAOB Chair Erica Y. Williams. “We thank all the commenters who provided us with valuable perspectives, and we look forward to monitoring the implementation and impact of the amendment.”

Key Components of the Amendment

The amendment creates a new procedural mechanism that would permit the Board, under specified conditions, to:

• Treat a PCAOB-registered firm’s failures both to file annual reports with the PCAOB and to pay annual fees to the PCAOB for at least two consecutive reporting years as a constructive request for leave to withdraw from PCAOB registration; and
• Deem the firm’s registration withdrawn.

Amendment Shaped by Stakeholder Input

Following a February 2024 proposal that included the amendment, the Board received input from a range of commenters. While commenters were generally supportive of the proposed amendment, the PCAOB also made changes to address stakeholder feedback. For example, the February proposal originally contemplated a 30-day period for firms to send an email to the PCAOB’s Registration staff to stop the withdrawal process. In response to stakeholder input, the 30-day period was extended to 60 days.

Note: The February proposal included a proposed new Rule 2400 regarding false or misleading statements concerning PCAOB registration and oversight. The PCAOB continues to consider next steps regarding proposed Rule 2400.

Effective Dates and More Information

The amendment is subject to approval by the U.S. Securities and Exchange Commission (SEC). If approved by the SEC, the amended rule will take effect initially for annual reports and annual fees that are due in 2025, meaning that a registered firm that does not file an annual report and does not pay an annual fee for both the 2025 and 2026 reporting years could be deemed withdrawn from registration under Rule 2107(h) beginning in the fall of 2026.

More information on the history of this project, including historical documents and comments received, can be found in Rulemaking Docket 054. Learn more about the PCAOB’s rulemaking agenda on the PCAOB website. 

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About the PCAOB 

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers registered with the Securities and Exchange Commission, including compliance reports filed pursuant to federal securities laws. 

Contact 

PCAOB Office of Communications and Engagement 
[email protected]