The Securities and Exchange Commission voted to approve the 2017 budget of the Public Company Accounting Oversight Board (PCAOB) and the related annual accounting support fee.
The budget totals $268.5 million and will be funded by the collection of an accounting support fee. The board is a nonprofit corporation established by Congress to protect investors and the public interest by promoting informative, accurate, and independent audit reports and to oversee the audits of public companies and broker-dealers.
“The PCAOB’s mission to promote informative, accurate, and independent audit reports and to oversee auditors of public companies and SEC registered broker-dealers is critical to investor protection and our markets,” said SEC Chair Mary Jo White. “The 2017 budget provides the PCAOB with the funding necessary to continue to conduct inspections of auditors of U.S. public companies and broker-dealers, advance its research and standard-setting agendas, perform necessary economic and risk analysis, and conduct outreach. In furtherance of carrying out its mission in a cost-effective way, the PCAOB will undertake a study of operational efficiency and budgetary needs and submit a report to the Commission by mid-March next year.”
The Sarbanes-Oxley Act of 2002 established the PCAOB to oversee the audits and auditors of financial statements filed by public companies and registered broker-dealers. The Sarbanes-Oxley Act designated the SEC to oversee the PCAOB and specifies that the PCAOB’s budget and accounting support fee, which funds its operations, be subject to approval by the Commission.
The PCAOB budget includes:
- A 2017 budget of $268.5 million
- A 2017 accounting support fee totaling $268 million allocated as follows:
- $232.6 million to be assessed on public companies
- $35.4 million to be assessed on broker-dealers
The PCAOB’s 2017 budget represents an increase of approximately 4 percent from its 2016 budget of $257.7 million and an increase of approximately 6 percent over its estimated $252.8 million in spending in 2016. The 2017 accounting support fee of $268 million is approximately 6 percent higher than the 2016 accounting support fee of $253.3 million.
The board recently said Brazil-based Deloitte Touche Tohmatsu Auditores Independentes will pay an $8 million civil penalty, the largest ever imposed by the PCAOB, to settle charges including issuing materially false audit reports and attempting to cover up audit violations by improperly altering documents and providing false testimony.
The PCAOB also announced sanctions against 12 former partners and other audit personnel of the firm, including certain firm leaders, for violations including noncooperation with a PCAOB inspection and subsequent investigation. A former engagement partner also was charged with causing the firm to issue materially false audit reports.
Deloitte Brazil admitted that it violated quality control standards and failed to cooperate with a PCAOB inspection and investigation, the first admissions the PCAOB has obtained from a global network firm.
In addition, Mexico-based Galaz, Yamazaki, Ruiz Urquiza, S.C. (Deloitte Mexico) was censured and will pay a $750,000 civil penalty for failing to effectively implement quality control policies and procedures for audit documentation.
Two former Deloitte Mexico partners and another former auditor also were sanctioned for violations including audit deficiencies and improper alteration of work papers on a 2010 audit of a large U.S.-based mining company.
From 2011 to 2015, Deloitte Mexico failed to archive audit documentation of numerous public company audits within 45 days of the audit report release date in violation of Auditing Standard No. 3, Audit Documentation. The firm also violated PCAOB quality control standards by failing to effectively implement policies and procedures to ensure the timely archiving of audit documentation by its engagement teams.
Connect with NJTODAY.NET
Join NJTODAY.NET's free Email List to receive occasional updates delivered right to your email address!