PCAOB Proposes Rules for Reporting by Audit Firms, Successor Firm Matters
May 23, 2006
FEI Summary
The Public Company Accounting Oversight Board (PCAOB) voted on May 23, 2006 to issue proposed rules that would require registered accounting firms to report the following information:
- annually, provide basic information about the firm and the firm's issuer-related practice over the most recent 12-month period, and
- upon the occurrence of certain events specified in the proposed rule, report those events to the PCAOB within 14 days.
The proposed rules are being issued in accordance with Section 102(d) of the Sarbanes-Oxley Act of 2002, which requires registered public accounting firms to submit an annual report to the PCAOB, and allows the PCAOB to require more frequent reporting of information specified by the PCAOB or the U.S. Securities and Exchange Commission (SEC).
Additionally, the PCAOB voted to propose rules to allow a successor firm to succeed to the registration status of a predecessor firm following a merger or other change in the registered firm's legal form.
The intent of the successor firm proposed rule is to minimize disruption of:
- a firm's registration because registration is essential to a firm's ability lawfully to audit issuers, and
- an issuer's compliance with federal law and regulations, which depends upon its auditor being registered with the PCAOB.
There will be a 60 day comment period on the proposed rules, ending July 24.
Additional information
Further information about the new forms which registered auditors will be required to file with the PCAOB under the proposed rules (Forms 2, 3 and 4), including information which issuer companies may particularly find of interest, is available here.
Links to the proposed rules:
Periodic Reporting by Registered Accounting Firms [Annual Form 2; Special Event Reporting Form 3]
Succeeding to the Registration Status of a Predecessor Firm [Form 4]
Prepared May 23, 2006 by Edith Orenstein (eorenstein@FinancialExecutives.org), Director, Technical Policy Analysis, Financial Executives International (FEI). This summary does not represent FEI opinion, unless specifically noted above.