PCAOB Approves 2011 Budget and Related Strategic Plan

Washington, DC, Nov. 23, 2010

The Public Company Accounting Oversight Board today approved its 2011 fiscal-year budget of approximately $204.4 million and a related Five-Year Strategic Plan.

The budget is $21.1 million, or 11.5 percent, above the Board's 2010 budget of $183.3 million, in part to address the PCAOB’s new oversight of broker-dealer auditors, following passage of the Dodd-Frank Act.

"More than half of the projected 2011 headcount increase will be devoted to implementation of the provisions of the Dodd-Frank Act that expand the Board’s inspection, standard-setting, and enforcement authority to the audits and auditors of Securities and Exchange Commission-registered securities broker-dealers,” said Daniel L. Goelzer, Acting PCAOB Chairman. "While the Board may ultimately conclude that the auditors of some categories of brokerage firms should be exempted from oversight, creating a program to oversee broker-dealer audits will be a major undertaking and will require significant resources."

Pursuant to the Sarbanes-Oxley Act, the PCAOB budget provides the foundation for the year’s accounting support fee, which, in conjunction with the registration and annual fees paid by registered auditors, funds the PCAOB's annual budget. In adding the new broker-dealer auditor oversight authority, Dodd-Frank required the Board to allocate an appropriate portion of the accounting support fee to broker-dealers. The total accounting support fee for 2011 is $202.3 million, with approximately $187.9 million allocated to public companies and $14.4 million to broker-dealers. As discussed at the Open Meeting, the Board intends to consider asking the Commission to increase the 2011 accounting support fee to fund a reserve that would permit the Board to address certain contingencies related to hiring and inspections.

The majority of new expenses in the 2011 budget are increases in staffing, information technology and facilities. The need for these additional resources is largely the result of certain changes in the Board's 2011 responsibilities and programs, including: (1) the commencement of a program to oversee broker-dealer audits, (2) enhanced requirements for performing and documenting PCAOB inspection work, and (3) a potential increased number of litigated enforcement proceedings.

The budget assumes an increase of 81 employees to reach a 2011 year-end projected total of 717 staff. The Division of Registration and Inspections still accounts for the majority of PCAOB employees at 58 percent in 2011. Of the total number of new staff, 41 Registration and Inspections staff are budgeted for the broker-dealer audit oversight program and 16 relate to the continuation of issuer audit oversight activities. The Division of Enforcement and Investigations also will add nine new staff members.

Presently, there are 2,399 public accounting firms registered with the PCAOB, including 902 based outside the United States, and 542 that registered since the beginning of 2009 because they audit nonpublic broker-dealers.

Also, today, the Board approved its strategic plan for 2010-2014 to serve as the foundation for the 2011 budget, as required by the Commission's PCAOB budget rule.

"Approving a new blueprint for the coming five years in tandem with the annual budget promotes a better alignment between the plan and the budget and assists the Board to think strategically about what it needs to accomplish with its available resources," Acting PCAOB Chairman Goelzer said.

The 2011 budget is subject to approval by the SEC. A summary of the 2011 budget will be available on the PCAOB Web site once it is submitted to the SEC for consideration. The PCAOB strategic plan also will be available to the public at the same time, and can be found under the "About the PCAOB" tab on the PCAOB Web site at www.pcaobus.org.