81 FR 14905 - Order Approving Public Company Accounting Oversight Board Budget and Annual Accounting Support Fee for Calendar Year 2016
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 53 (March 18, 2016)
Federal Register Volume 81, Issue 53 (March 18, 2016)
| Page Range | 14905-14906 | |
| FR Document | 2016-06095 |
[Federal Register Volume 81, Number 53 (Friday, March 18, 2016)] [Notices] [Pages 14905-14906] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-06095] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Securities Act of 1933; Release No. 10054/March 14, 2016; Securities Exchange Act of 1934; Release No. 77367/March 14, 2016] Order Approving Public Company Accounting Oversight Board Budget and Annual Accounting Support Fee for Calendar Year 2016 The Sarbanes-Oxley Act of 2002, as amended (the ``Sarbanes-Oxley Act''),\1\ established the Public Company Accounting Oversight Board (``PCAOB'') to oversee the audits of companies that are subject to the securities laws, and related matters, in order to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports. The Dodd-Frank Wall Street Reform and Consumer Protection Act \2\ amended the Sarbanes-Oxley Act to provide the PCAOB with explicit authority to oversee auditors of broker-dealers registered with the Commission. The PCAOB is to accomplish these goals through registration of public accounting firms and standard setting, inspection, and disciplinary programs. The PCAOB is subject to the comprehensive oversight of the Securities and Exchange Commission (the ``Commission''). --------------------------------------------------------------------------- \1\ 15 U.S.C. 7201 et seq. \2\ Public Law 111-203, 124 Stat. 1376 (2010). --------------------------------------------------------------------------- Section 109 of the Sarbanes-Oxley Act provides that the PCAOB shall establish a reasonable annual accounting support fee, as may be necessary or appropriate to establish and maintain the PCAOB. Under Section 109(f) of the Sarbanes-Oxley Act, the aggregate annual accounting support fee shall not exceed the PCAOB's aggregate ``recoverable budget expenses,'' which may include operating, capital and accrued items. The PCAOB's annual budget and accounting support fee are subject to approval by the Commission. In addition, the PCAOB must allocate the annual accounting support fee among issuers and among brokers and dealers.\3\ --------------------------------------------------------------------------- \3\ Separately the Commission is responsible for review of an accounting support fee for the FASB pursuant to Section 109(e) of the Sarbanes-Oxley Act that is allocated among issuers. This separate accounting support fee is not addressed by this order. --------------------------------------------------------------------------- Section 109(b) of the Sarbanes-Oxley Act directs the PCAOB to establish a budget for each fiscal year in accordance with the PCAOB's internal procedures, subject to approval by the Commission. Rule 190 of Regulation P facilitates the Commission's review and approval of PCAOB budgets and annual accounting support fees.\4\ This budget rule provides, among other things, a timetable for the preparation and submission of the PCAOB budget and for Commission actions related to each budget, a description of the information that should be included in each budget submission, limits on the PCAOB's ability to incur expenses and obligations except as provided in the approved budget, procedures relating to supplemental budget requests, requirements for the PCAOB to furnish on a quarterly basis certain budget-related information, and a list of definitions that apply to the rule and to general discussions of PCAOB budget matters. --------------------------------------------------------------------------- \4\ 17 CFR 202.190. --------------------------------------------------------------------------- In accordance with the budget rule, in March 2015 the PCAOB provided the Commission with a narrative description of its program issues and outlook for the 2016 budget year. In response, the Commission provided the PCAOB with economic assumptions and budgetary guidance for the 2016 budget year. The PCAOB subsequently delivered a preliminary budget and budget justification to the Commission. Staff from the Commission's Offices of the Chief Accountant and Financial Management dedicated a substantial amount of time to the review and analysis of the PCAOB's programs, projects and budget estimates; reviewed the PCAOB's estimates of 2015 actual spending; and attended several meetings with management and staff of the PCAOB to further develop the Commission staff's understanding of the PCAOB's budget and operations. During the course of this review, Commission staff relied upon representations and supporting documentation from the PCAOB. Based on this review, the Commission authorized the staff to issue a ``pass back'' letter to the PCAOB. On November 24, 2015, the PCAOB approved its 2016 budget during an open meeting, and subsequently submitted that budget to the Commission for approval. After considering the above, the Commission did not identify any proposed disbursements in the 2016 budget adopted by the PCAOB that are not properly recoverable through the annual accounting support fee, and the Commission believes that the aggregate proposed 2016 annual accounting support fee does not exceed the PCAOB's aggregate recoverable budget expenses for 2016. The Commission also acknowledges the PCAOB's updated strategic plan and encourages the PCAOB to continue keeping the Commission and its staff apprised of significant new developments. The Commission looks forward to providing views to the PCAOB as future updates are made to the plan. We understand that the PCAOB has taken significant steps to advance its assessments of the performance and management of the PCAOB's standard-setting process, including the engagement of an external consultant. The Commission directs the PCAOB to continue to provide timely updates throughout the year on the progress of the Board's review of the PCAOB's standard setting process, including anticipated changes to processes or funding. The Commission recognizes that in recent years, the PCAOB has taken significant steps to establish the Center for Economic Analysis (``Center''). The Commission directs the PCAOB to continue providing quarterly updates to the Commission on the Center's activities and progress towards its stated goals. The Commission directs the Board to continue to provide in its quarterly reports to the Commission detailed information about the state of the PCAOB's IT program, including planned, estimated, and actual costs for IT projects, and the level of involvement of consultants. These reports also should continue to include: (a) A discussion of the Board's assessment of the IT program; and (b) the quarterly IT [[Page 14906]] report that is prepared by PCAOB staff and submitted to the Board. The Commission also directs the Board during 2016 to continue to include in its quarterly reports to the Commission information about the PCAOB's inspections program. Such information is to include: (a) Statistics relative to the numbers and types of firms budgeted and expected to be inspected in 2016, including by location and by year the inspections are required to be conducted in accordance with the Sarbanes-Oxley Act and PCAOB rules; (b) information about the timing of the issuance of inspections reports for domestic and non-U.S. inspections; and (c) updates on the PCAOB's efforts to establish cooperative arrangements with respective non-U.S. authorities for inspections required in those countries. The Commission understands that the Office of Management and Budget (``OMB'') has determined the 2016 budget of the PCAOB to be sequestrable under the Budget Control Act of 2011.\5\ Consequently, we expect the PCAOB will have approximately $1 million in excess funds available from the 2015 sequestration for spending in 2016. Accordingly, the PCAOB has reduced its accounting support fee for 2016 by approximately $1 million. --------------------------------------------------------------------------- \5\ See ``OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year 2016'', Appendix page 15 of 15 at: https://www.whitehouse.gov/sites/default/files/omb/assets/legislative_reports/sequestration/2016_jc_sequestration_report_speaker.pdf. --------------------------------------------------------------------------- The Commission has determined that the PCAOB's 2016 budget and annual accounting support fee are consistent with Section 109 of the Sarbanes-Oxley Act. Accordingly, It is ordered, pursuant to Section 109 of the Sarbanes-Oxley Act, that the PCAOB budget and annual accounting support fee for calendar year 2016 are approved. By the Commission. Robert W. Errett, Deputy Secretary. [FR Doc. 2016-06095 Filed 3-17-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 53 / Friday, March 18, 2016 / Notices 14905
Commission and any person, other than Securities and Exchange Commission the PCAOB’s estimates of 2015 actual
those that may be withheld from the (the ‘‘Commission’’). spending; and attended several meetings
public in accordance with the Section 109 of the Sarbanes-Oxley Act with management and staff of the
provisions of 5 U.S.C. 552, will be provides that the PCAOB shall establish PCAOB to further develop the
available for Web site viewing and a reasonable annual accounting support Commission staff’s understanding of the
printing in the Commission’s Public fee, as may be necessary or appropriate PCAOB’s budget and operations. During
Reference Room, 100 F Street NE., to establish and maintain the PCAOB. the course of this review, Commission
Washington, DC 20549 on official Under Section 109(f) of the Sarbanes- staff relied upon representations and
business days between the hours of Oxley Act, the aggregate annual supporting documentation from the
10:00 a.m. and 3:00 p.m. Copies of the accounting support fee shall not exceed PCAOB. Based on this review, the
filing also will be available for the PCAOB’s aggregate ‘‘recoverable Commission authorized the staff to issue
inspection and copying at the principal budget expenses,’’ which may include a ‘‘pass back’’ letter to the PCAOB. On
office of the Exchange. All comments operating, capital and accrued items. November 24, 2015, the PCAOB
received will be posted without change; The PCAOB’s annual budget and approved its 2016 budget during an
the Commission does not edit personal accounting support fee are subject to open meeting, and subsequently
identifying information from approval by the Commission. In submitted that budget to the
submissions. You should submit only addition, the PCAOB must allocate the Commission for approval.
information that you wish to make annual accounting support fee among After considering the above, the
available publicly. All submissions issuers and among brokers and dealers.3 Commission did not identify any
should refer to File Number SR–NYSE– Section 109(b) of the Sarbanes-Oxley proposed disbursements in the 2016
2016–20 and should be submitted on or Act directs the PCAOB to establish a budget adopted by the PCAOB that are
before April 8, 2016. budget for each fiscal year in accordance not properly recoverable through the
with the PCAOB’s internal procedures, annual accounting support fee, and the
For the Commission, by the Division of subject to approval by the Commission. Commission believes that the aggregate
Trading and Markets, pursuant to delegated
Rule 190 of Regulation P facilitates the proposed 2016 annual accounting
authority.20
Commission’s review and approval of support fee does not exceed the
Robert W. Errett, PCAOB budgets and annual accounting PCAOB’s aggregate recoverable budget
Deputy Secretary. support fees.4 This budget rule expenses for 2016. The Commission also
[FR Doc. 2016–06090 Filed 3–17–16; 8:45 am] provides, among other things, a acknowledges the PCAOB’s updated
BILLING CODE 8011–01–P timetable for the preparation and strategic plan and encourages the
submission of the PCAOB budget and PCAOB to continue keeping the
for Commission actions related to each Commission and its staff apprised of
SECURITIES AND EXCHANGE budget, a description of the information significant new developments. The
COMMISSION that should be included in each budget Commission looks forward to providing
submission, limits on the PCAOB’s views to the PCAOB as future updates
[Securities Act of 1933; Release No. 10054/
ability to incur expenses and obligations are made to the plan.
March 14, 2016; Securities Exchange Act
of 1934; Release No. 77367/March 14, 2016] except as provided in the approved We understand that the PCAOB has
budget, procedures relating to taken significant steps to advance its
Order Approving Public Company supplemental budget requests, assessments of the performance and
Accounting Oversight Board Budget requirements for the PCAOB to furnish management of the PCAOB’s standard-
and Annual Accounting Support Fee on a quarterly basis certain budget- setting process, including the
for Calendar Year 2016 related information, and a list of engagement of an external consultant.
definitions that apply to the rule and to The Commission directs the PCAOB to
The Sarbanes-Oxley Act of 2002, as general discussions of PCAOB budget continue to provide timely updates
amended (the ‘‘Sarbanes-Oxley Act’’),1 matters. throughout the year on the progress of
established the Public Company In accordance with the budget rule, in the Board’s review of the PCAOB’s
Accounting Oversight Board (‘‘PCAOB’’) March 2015 the PCAOB provided the standard setting process, including
to oversee the audits of companies that Commission with a narrative anticipated changes to processes or
are subject to the securities laws, and description of its program issues and funding.
related matters, in order to protect the outlook for the 2016 budget year. In The Commission recognizes that in
interests of investors and further the response, the Commission provided the recent years, the PCAOB has taken
public interest in the preparation of PCAOB with economic assumptions and significant steps to establish the Center
informative, accurate and independent budgetary guidance for the 2016 budget for Economic Analysis (‘‘Center’’). The
audit reports. The Dodd-Frank Wall year. The PCAOB subsequently Commission directs the PCAOB to
Street Reform and Consumer Protection delivered a preliminary budget and continue providing quarterly updates to
Act 2 amended the Sarbanes-Oxley Act budget justification to the Commission. the Commission on the Center’s
to provide the PCAOB with explicit Staff from the Commission’s Offices of activities and progress towards its stated
authority to oversee auditors of broker- the Chief Accountant and Financial goals.
dealers registered with the Commission. Management dedicated a substantial The Commission directs the Board to
The PCAOB is to accomplish these goals amount of time to the review and continue to provide in its quarterly
reports to the Commission detailed
asabaliauskas on DSK3SPTVN1PROD with NOTICES
through registration of public analysis of the PCAOB’s programs,
accounting firms and standard setting, projects and budget estimates; reviewed information about the state of the
inspection, and disciplinary programs. PCAOB’s IT program, including
The PCAOB is subject to the 3 Separately the Commission is responsible for planned, estimated, and actual costs for
comprehensive oversight of the review of an accounting support fee for the FASB IT projects, and the level of involvement
pursuant to Section 109(e) of the Sarbanes-Oxley of consultants. These reports also
Act that is allocated among issuers. This separate
20 17CFR 200.30–3(a)(12). accounting support fee is not addressed by this should continue to include: (a) A
1 15U.S.C. 7201 et seq. order. discussion of the Board’s assessment of
2 Public Law 111–203, 124 Stat. 1376 (2010). 4 17 CFR 202.190. the IT program; and (b) the quarterly IT
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![14906 Federal Register / Vol. 81, No. 53 / Friday, March 18, 2016 / Notices
report that is prepared by PCAOB staff SECURITIES AND EXCHANGE II. Self-Regulatory Organization’s
and submitted to the Board. The COMMISSION Statement of the Purpose of, and
Commission also directs the Board Statutory Basis for, the Proposed Rule
during 2016 to continue to include in its [Release No. 34–77364; File No. SR–MSRB– Change
quarterly reports to the Commission 2016–04] In its filing with the Commission, the
information about the PCAOB’s MSRB included statements concerning
inspections program. Such information Self-Regulatory Organizations; the purpose of and basis for the
is to include: (a) Statistics relative to the Municipal Securities Rulemaking proposed rule change and discussed any
numbers and types of firms budgeted Board; Notice of Filing of a Proposed comments it received on the proposed
and expected to be inspected in 2016, Rule Change Consisting of Proposed rule change. The text of these statements
including by location and by year the Amendments to Rules G–12 and G–15 may be examined at the places specified
inspections are required to be To Define Regular-Way Settlement for in Item IV below. The MSRB has
conducted in accordance with the Municipal Securities Transactions as prepared summaries, set forth in
Occurring on a Two-Day Settlement Sections A, B, and C below, of the most
Sarbanes-Oxley Act and PCAOB rules;
Cycle and Technical Conforming significant aspects of such statements.
(b) information about the timing of the
Amendments
issuance of inspections reports for A. Self-Regulatory Organization’s
domestic and non-U.S. inspections; and March 14, 2016. Statement of the Purpose of, and
(c) updates on the PCAOB’s efforts to Pursuant to Section 19(b)(1) of the Statutory Basis for, the Proposed Rule
establish cooperative arrangements with Securities Exchange Act of 1934 (the Change
respective non-U.S. authorities for ‘‘Exchange Act’’ or ‘‘Act’’) 1 and Rule 1. Purpose
inspections required in those countries. 19b–4 thereunder,2 notice is hereby
given that on March 1, 2016, the Background
The Commission understands that the
Office of Management and Budget Municipal Securities Rulemaking Board Following the financial crisis in 2008,
(‘‘OMB’’) has determined the 2016 (the ‘‘MSRB’’ or ‘‘Board’’) filed with the regulators implemented additional rules
Securities and Exchange Commission and regulations designed to reduce risk
budget of the PCAOB to be sequestrable
(the ‘‘SEC’’ or ‘‘Commission’’) the in the markets, achieve greater
under the Budget Control Act of 2011.5
proposed rule change as described in transparency and improve efficiency in
Consequently, we expect the PCAOB the financial industry. Consistent with
will have approximately $1 million in Items I, II, and III below, which Items
have been prepared by the MSRB. The those goals, the securities industry
excess funds available from the 2015 launched a voluntary initiative to
Commission is publishing this notice to
sequestration for spending in 2016. shorten the settlement cycle for
solicit comments on the proposed rule
Accordingly, the PCAOB has reduced its change from interested persons. securities transactions to reduce
accounting support fee for 2016 by counterparty risk, decrease clearing
approximately $1 million. I. Self-Regulatory Organization’s capital requirements, reduce liquidity
Statement of the Terms of Substance of demands, and harmonize the settlement
The Commission has determined that
the Proposed Rule Change cycle globally. The industry-led
the PCAOB’s 2016 budget and annual
accounting support fee are consistent The MSRB filed with the Commission initiative to shift from the current
with Section 109 of the Sarbanes-Oxley a proposed rule change consisting of regular-way settlement cycle defined as
Act. Accordingly, proposed amendments to Rule G–12, on a three-day settlement cycle (‘‘T+3’’) to
uniform practice, and Rule G–15, on a T+2 settlement cycle is being led by
It is ordered, pursuant to Section 109 the Shortened Settlement Cycle Industry
of the Sarbanes-Oxley Act, that the confirmation, clearance, settlement and
other uniform practice requirements Steering Committee (‘‘ISC’’) which is
PCAOB budget and annual accounting jointly chaired by the Investment
with respect to transactions with
support fee for calendar year 2016 are Company Institute (‘‘ICI’’) and the
customers, to define regular-way
approved. Securities Industry and Financial
settlement for municipal securities
By the Commission. transactions as occurring on a two-day Markets Association (‘‘SIFMA’’).3 The
settlement cycle (‘‘T+2’’) and technical ISC announced its proposal in a white
Robert W. Errett,
conforming amendments (‘‘proposed paper (the ‘‘white paper’’), which
Deputy Secretary. outlined the timeline and activities
[FR Doc. 2016–06095 Filed 3–17–16; 8:45 am] rule change’’). The compliance date of
the proposed rule change will be required to move to a T+2 settlement
BILLING CODE 8011–01–P
announced by the MSRB in a notice cycle in the U.S. for equities, corporate
published on the MSRB Web site, which and municipal bonds, and unit
date would correspond with the investment trust trades.4 The ISC’s
industry’s transition to a T+2 regular- white paper identified all SEC and self-
way settlement, which would include regulatory organization (‘‘SRO’’) rule
amendments by the SEC to Exchange changes that it believed would be
Act Rule 15c6–1(a). necessary to support a T+2 settlement
cycle.
The text of the proposed rule change The ISC recommended a timeline
is available on the MSRB’s Web site at
asabaliauskas on DSK3SPTVN1PROD with NOTICES
calling for relevant regulatory
www.msrb.org/Rules-and-
Interpretations/SEC-Filings/2016- 3 Shortening the Settlement Cycle: The Move to
5 See
Filings.aspx, at the MSRB’s principal T+2, available at, http://www.ust2.com/pdfs/
‘‘OMB Report to the Congress on the Joint
office, and at the Commission’s Public ssc.pdf. Other participating industry associations
Committee Reductions for Fiscal Year 2016’’, include: The Association of Global Custodians, The
Appendix page 15 of 15 at: https://
Reference Room.
Association of Institutional Investors, The
www.whitehouse.gov/sites/default/files/omb/assets/ Securities Transfer Association, Inc., and The
legislative_reports/sequestration/2016_jc_ 1 15 U.S.C. 78s(b)(i). Depository Trust & Clearing Corporation (‘‘DTCC’’).
sequestration_report_speaker.pdf. 2 17 CFR 240.19b–4. 4 Id.
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Document Created: 2018-02-02 15:13:49
Document Modified: 2018-02-02 15:13:49
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 81 FR 14905 |
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