Federal Register / Vol. 88, No. 233 / Wednesday, December 6, 2023 / Notices 84837 

1 15 U.S.C. 7217(b). 

2 15 U.S.C. 78s(b). 

3See Public Company Accounting Oversight 

Board; Notice of Filing of Proposed Rules on The 

Auditor’s Use of Confirmation, and Other 

Amendments to PCAOB Standards, Release No. 34– 

98689 (Oct. 5, 2023) [88 FR 71684 (Oct. 17, 2023)], 

available at https://www.sec.gov/rules/pcaob/2023/ 

34-98689.pdf. 

4We received comment letters from Deloitte & 

Touche LLP (Nov. 2, 2023), 

PricewaterhouseCoopers LLP (Nov. 6, 2023), and 

Gopal Krushna Panda (Nov. 6, 2023). Copies of the 

comment letters received on the Commission notice 

of the Amendments are available on the 

Commission’s website at https://www.sec.gov/ 

comments/pcaob-2023-02/pcaob202302.htm. 

5See The Auditor’s Use of Confirmation, and 

Other Amendments to PCAOB Standards, PCAOB 

Release No. 2023–008 (Sept. 28, 2023), available at 

https://assets.pcaobus.org/pcaob-dev/docs/defaultsource/rulemaking/docket_028/2023-008_

confirmation-adoptingrelease.pdf?sfvrsn=e18cef74_4. 

6See AS 2310.03, as amended. 

7See AS 2310.24 through .27, as amended. 

8See AS 2310.30, as amended. 

9See AS 2310.25, as amended. 

10See AS 2310.28, as amended. 

11See AS 2310.12 and .13, as amended. 

Analysis 

Agency: Retirement Services, Office of 

Personnel Management. 

Title: Initial Certification of Full-Time 

School Attendance. 

OMB Number: 3206–0099. 

Frequency: On occasion. 

Affected Public: Individual or 

Households. 

Number of Respondents: 1,200. 

Estimated Time per Respondent: 90 

minutes. 

Total Burden Hours: 1,800. 

Office of Personnel Management. 

Kayyonne Marston, 

Federal Register Liaison. 

[FR Doc. 2023–26772 Filed 12–5–23; 8:45 am] 

BILLING CODE 6325–38–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99060; File No. PCAOB– 

2023–02] 

Public Company Accounting Oversight 

Board; Order Granting Approval of 

Auditing Standard Governing the 

Auditor’s Use of Confirmation 

I. Introduction 

On October 4, 2023, the Public 

Company Accounting Oversight Board 

(the ‘‘Board’’ or the ‘‘PCAOB’’) filed 

with the Securities and Exchange 

Commission (the ‘‘Commission’’), 

pursuant to section 107(b) 1 of the 

Sarbanes-Oxley Act of 2002 (‘‘SOX’’) 

and section 19(b) 2 of the Securities 

Exchange Act of 1934 (the ‘‘Exchange 

Act’’), a proposal to adopt Auditing 

Standard (‘‘AS’’) 2310, The Auditor’s 

Use of Confirmation (AS 2310); rescind 

AS 2310, The Confirmation Process (AS 

2310); and amend several other existing 

auditing standards (collectively, the 

‘‘Amendments’’). The Amendments 

were published for comment in the 

Federal Register on October 17, 2023.3

We received three (3) comment letters in 

response to the notice.4 This order 

approves the Amendments, which we 

find to be consistent with the 

requirements of SOX and the securities 

laws and necessary or appropriate in the 

public interest or for the protection of 

investors. 

II. Description of the Amendments 

On September 28, 2023, the Board 

unanimously adopted the 

Amendments.5 The Amendments are 

intended to strengthen and modernize 

the requirements for the confirmation 

process by describing principles-based 

requirements for all methods of 

confirmation, including paper-based 

and electronic means of 

communications. In addition, the new 

standard is more directly integrated 

with the PCAOB’s risk assessment 

standards by incorporating certain riskbased considerations and emphasizing 

the auditor’s responsibilities for 

obtaining relevant and reliable audit 

evidence through the confirmation 

process. This should promote investor 

protection by enhancing the quality of 

audits. The requirements contained 

within the Amendments are discussed 

further below. 

A. Changes to PCAOB Standards 

Among other things, the Amendments 

enhance the existing confirmation 

requirements by: 

• Including principles-based 

requirements that are designed to apply 

to all methods of confirmation. These 

methods include longstanding practices, 

such as the use of paper-based 

confirmation requests and responses 

sent via regular mail; methods that 

involve electronic means of 

communications, such as the use of 

email or an intermediary to facilitate 

direct electronic transmission of 

confirmation requests and responses; 

and methods that have yet to develop. 

• Expressly aligning the requirements 

for the auditor’s use of confirmation 

with the requirements of the Board’s 

risk assessment standards, including AS 

1105. The Amendments specify certain 

risk-based considerations and 

emphasize the auditor’s responsibility 

to obtain relevant and reliable audit 

evidence when performing confirmation 

procedures.6

• Strengthening the requirements for 

the use of confirmation procedures in 

certain situations. The Amendments 

add a requirement that the auditor 

should perform confirmation 

procedures for cash held by third 

parties, carry forward the existing 

requirement that the auditor normally 

should perform confirmation 

procedures for accounts receivable, and 

include a new provision that the auditor 

may otherwise obtain audit evidence by 

directly accessing information 

maintained by a knowledgeable external 

source for cash and accounts 

receivable.7 In addition, the 

Amendments carry forward the existing 

requirement that the auditor consider 

confirming the terms of certain other 

transactions.8

• Addressing situations in which it 

would not be feasible for the auditor to 

obtain information directly from a 

knowledgeable external source. The 

Amendments provide that if it would 

not be feasible for the auditor to obtain 

audit evidence directly from a 

knowledgeable external source for 

accounts receivable, the auditor should 

perform other substantive procedures, 

including tests of details, that involve 

obtaining audit evidence from external 

sources indirectly.9

• Mandatory communications with 

the audit committee regarding certain 

audit responses to significant risks. 

Under the Amendments, for significant 

risks associated with cash or accounts 

receivable, the auditor is required to 

communicate with the audit committee 

when the auditor either did not perform 

confirmation procedures or otherwise 

obtained audit evidence by directly 

accessing information maintained by a 

knowledgeable external source.10

• Reflecting the relatively 

insignificant amount of audit evidence 

obtained when using negative 

confirmation requests. Under the 

Amendments, the use of negative 

confirmation requests may provide 

sufficient appropriate audit evidence 

only when combined with other 

substantive procedures. The 

Amendments include examples of 

situations in which the use of negative 

confirmation requests in combination 

with other substantive procedures may 

provide sufficient appropriate audit 

evidence.11

• Emphasizing the auditor’s 

responsibility to maintain control over 

the confirmation process. The 

Amendments state that the auditor 

should select the items to be confirmed, 


lotter on DSK11XQN23PROD with NOTICES1
84838 Federal Register / Vol. 88, No. 233 / Wednesday, December 6, 2023 / Notices 

12See AS 2310.14 through .17, as amended. 

13See AS 2310.11, .19, .23, and Appendix C, as 

amended. 

14The term ‘‘emerging growth company’’ is 

defined in section 3(a)(80) of the Exchange Act (15 

U.S.C. 78c(a)(80)). See also Inflation Adjustments 

and Other Technical Amendments Under Titles I 

and III of the JOBS Act, Release No. 33–10332 (Mar. 

31, 2017) [82 FR 17545 (Apr. 12, 2017)], available 

at https://www.sec.gov/rules/final/2017/33- 

10332.pdf. 

15See Supra note 4. 

16See section 107 of SOX. 

17See section 107(b)(3) of SOX. SOX also 

specifies that the provisions of section 19(b) of the 

Exchange Act shall govern the proposed rules of the 

Board. See section 107(b)(4) of SOX. section 19 of 

the Exchange Act covers the registration, 

responsibilities, and oversight of self-regulatory 

organizations. Under the procedures prescribed by 

SOX and section 19(b)(2) of the Exchange Act, the 

Commission must either approve or disapprove, or 

institute proceedings to determine whether the 

proposed rules of the Board should be disapproved; 

and these procedures do not expressly permit the 

Commission to amend or supplement the proposed 

rules of the Board. 

18See the Notice of Filing of Proposed Rules, 

supra note 3. 

19While the precise scope of this category of rules 

under section 103(a)(3)(C) is not entirely clear, we 

do not interpret this statutory language as 

precluding the application of Board rules requiring 

inclusion of additional factual information about 

referred-to auditors and the scope of their work in 

connection with the audits of EGCs. In our view, 

this approach reflects an appropriate interpretation 

of the statutory language and is consistent with our 

understanding of the Congressional purpose 

underlying this provision. 

send confirmation requests, and receive 

confirmation responses.12

• Providing more specific direction 

for circumstances where the auditor is 

unable to obtain relevant and reliable 

audit evidence through confirmations. 

The Amendments identify situations 

where other procedures should be 

performed by the auditor as an 

alternative to confirmations. The 

Amendments also include examples of 

such alternative procedures that may 

provide relevant and reliable audit 

evidence.13

B. Applicability and Effective Date 

The Amendments will be effective for 

all audits of financial statements for 

fiscal years ending on or after June 15, 

2025. The PCAOB has proposed 

application of the Amendments to 

include audits of emerging growth 

companies (‘‘EGCs’’),14 as discussed in 

Section IV below. 

III. Comment Letters 

The comment period on the 

Amendments ended on November 7, 

2023. We received three (3) comment 

letters.15 The commenters generally 

supported the Amendments and 

encouraged us to support the PCAOB’s 

plans to monitor implementation, 

conduct post-implementation review, 

and monitor advancements in 

technology that may affect application 

of the Amendments. We acknowledge 

the importance of monitoring the 

implementation of the Amendments and 

the Commission staff works closely with 

the PCAOB as part of our general 

oversight mandate.16 As part of that 

oversight, Commission staff will keep 

itself apprised of the PCAOB’s activities 

for monitoring the implementation of 

the Amendments and update the 

Commission, as necessary. Additionally, 

one commenter made suggestions for 

expanded explanations and examples. 

The adopting release addresses the 

points raised by the commenter. 

SOX requires us to determine whether 

the Amendments are consistent with the 

requirements of SOX and the securities 

laws or are necessary or appropriate in 

the public interest or for the protection 

of investors.17 In making this 

determination, we have considered the 

comments we received, as well as the 

feedback received and modifications 

made by the PCAOB throughout its 

rulemaking process. 

IV. Effect on Emerging Growth 

Companies 

In the notice of filing of the 

Amendments, the Board recommended 

that the Commission determine that the 

Amendments apply to audits of EGCs.18

section 103(a)(3)(C) of SOX, as amended 

by section 104 of the Jumpstart Our 

Business Startups Act of 2012, requires 

that any rules of the Board requiring 

mandatory audit firm rotation or a 

supplement to the auditor’s report in 

which the auditor would be required to 

provide additional information about 

the audit and the financial statements of 

the issuer (auditor discussion and 

analysis) shall not apply to an audit of 

an EGC. The provisions of the 

Amendments do not fall into these 

categories.19

Section 103(a)(3)(C) further provides 

that ‘‘[a]ny additional rules’’ adopted by 

the PCAOB after April 5, 2012, do not 

apply to audits of EGCs ‘‘unless the 

Commission determines that the 

application of such additional 

requirements is necessary or appropriate 

in the public interest, after considering 

the protection of investors and whether 

the action will promote efficiency, 

competition, and capital formation.’’ 

The Amendments fall within this 

category. Having considered those 

statutory factors, we find that applying 

the Amendments to the audits of EGCs 

is necessary or appropriate in the public 

interest. 

With respect to the Commission’s 

determination of whether the 

Amendments will apply to audits of 

EGCs, the PCAOB provided information, 

including data and analysis of EGCs 

identified by the Board’s staff, from 

public sources that sets forth its views 

as to why it believes the Amendments 

should apply to audits of EGCs. In 

addition, the Board sought public input 

on the application of the Amendments 

to the audits of EGCs. Commenters 

generally supported the application of 

the Amendments to the audits of EGCs. 

The Board noted that while the 

associated costs may be higher for EGC 

audits than for non-EGC audits, due to 

the scalability of the risk-based 

requirements, the costs of performing 

the procedures are unlikely to be 

disproportionate to the benefits of the 

procedures. Overall, the Amendments 

are expected to enhance audit quality 

and contribute to an increase in the 

credibility of financial reporting by 

EGCs. 

We agree with the Board’s analysis 

and further emphasize the price 

efficiency benefits discussed by the 

PCAOB noting that improvements in the 

quality of the audit may be more 

pronounced on the audits of EGCs, 

thereby potentially creating a larger 

increase to the price efficiency of EGCs 

by providing investors with more 

accurate information. Price efficiency 

helps investors make more informed 

investment decisions—facilitating 

issuers’, including EGCs’, access to 

capital—thus enhancing capital 

formation. Additionally, while the 

Amendments could impact competition 

in the EGC market if the indirect costs 

to audited companies 

disproportionately impact EGCs relative 

to their competitors, as the costs 

associated with the Amendments are 

expected to be relatively modest, any 

impact on competition is likely to be 

relatively small. As such, after 

considering the protection of investors 

and whether the action will promote 

efficiency, competition, and capital 

formation, we believe there is a 

sufficient basis to determine that 

applying the Amendments to the audits 

of EGCs is necessary or appropriate in 

the public interest. 

V. Conclusion 

The Commission has reviewed and 

considered the Amendments, the 

information submitted therewith by the 

PCAOB, and the comment letters 

received. In connection with the 

PCAOB’s filing and the Commission’s 

review, 

A. The Commission finds that the 

Amendments are consistent with the 

requirements of SOX and the securities 

laws and are necessary or appropriate in 


lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 88, No. 233 / Wednesday, December 6, 2023 / Notices 84839 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 90610, 

86 FR 18596 (April 9, 2021) (S7–03–20). 

5 15 U.S.C. 78f(b)(5). 

6 15 U.S.C. 78f(b)(8). 

the public interest or for the protection 

of investors; and 

B. Separately, the Commission finds 

that the application of the Amendments 

to the audits of EGCs is necessary or 

appropriate in the public interest, after 

considering the protection of investors 

and whether the action will promote 

efficiency, competition, and capital 

formation. 

It is therefore ordered, pursuant to 

section 107 of SOX and section 19(b)(2) 

of the Exchange Act, that the 

Amendments (File No. PCAOB–2023– 

02) be and hereby are approved. 

By the Commission. 

Dated: December 1, 2023. 

J. Matthew DeLesDernier, 

Deputy Secretary. 

[FR Doc. 2023–26773 Filed 12–5–23; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–99046; File No. SR– 

NYSENAT–2023–27] 

Self-Regulatory Organizations; NYSE 

National, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Update Citations to 

Rule 600(b) of Regulation National 

Market System 

November 30, 2023. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (‘‘Act’’ 

or ‘‘Exchange Act’’) 2 and Rule 19b–4 

thereunder,3 notice is hereby given that 

on November 20, 2023, NYSE National, 

Inc. (‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to update 

citations to Rule 600(b) of Regulation 

National Market System (‘‘Regulation 

NMS’’) in Rule 6.6810 (Consolidated 

Audit Trail—Definitions); Rule 7.28 

(NMS Market Access); Rule 7.31 (Orders 

and Modifiers); and Rule 11.5320 

(Prohibition Against Trading Ahead of 

Customer Orders). The proposed rule 

change is available on the Exchange’s 

website at www.nyse.com, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to update 

citations to Rule 600(b) of Regulation 

NMS in Rule 6.6810 (Consolidated 

Audit Trail—Definitions); Rule 7.28 

(NMS Market Access); Rule 7.31 (Orders 

and Modifiers); and Rule 11.5320 

(Prohibition Against Trading Ahead of 

Customer Orders). 

In 2021, the Securities and Exchange 

Commission (the ‘‘Commission’’) 

amended Regulation NMS under the Act 

in connection with the adoption of the 

Market Data Infrastructure Rules.4 As 

part of that initiative, the Commission 

adopted new definitions in Rule 600(b) 

of Regulation NMS and renumbered the 

remaining definitions, including the 

definition of Intermarket Sweep Order 

(formerly Rule 600(b)(30)), Listed 

Option (formerly Rule 600(b)(35), and 

NMS Participant (formerly Rule 

600(b)(53)). 

The Exchange accordingly proposes to 

update the relevant citations to Rule 

600(b) in its rules as follows. 

• The citation to the definition of 

Listed Option in Rule 6.6810(y) would 

be changed to Rule 600(b)(43). 

• The citation to the definition of 

NMS Participant in Rule 7.28(a) would 

be changed to Rule 600(b)(65). 

• The citation to the definition of 

automated quotation in Rule 7.31(e)(3) 

and Rule 11.5320, Commentary .04, 

would be changed to Rule 600(b)(38). 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b)(5) of the Exchange Act,5 in 

that it is designed to prevent fraudulent 

and manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

The Exchange believes that the 

proposed changes to its rules to correct 

citations to Rule 600(b) of Regulation 

NMS would remove impediments to 

and perfect the mechanism of a free and 

open market and a national market 

system because the proposed change is 

designed to update an external rule 

reference. The Exchange believes that 

member organizations would benefit 

from the increased clarity, thereby 

reducing potential confusion and 

ensuring that persons subject to the 

Exchange’s jurisdiction, regulators, and 

the investing public can more easily 

navigate and understand the Exchange’s 

rules. The Exchange further believes 

that the proposed amendment would 

not be inconsistent with the public 

interest and the protection of investors 

because investors will not be harmed 

and in fact would benefit from increased 

clarity, thereby reducing potential 

confusion. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act,6 the Exchange believes that the 

proposed rule change would not impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed rule change is not intended to 

address competitive issues but rather 

would modify Exchange rules to update 

citations to Rule 600(b) of Reg NMS. 

Since the proposal does not 

substantively modify system 

functionality or processes on the 

Exchange, the proposed changes will 

not impose any burden on competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 


lotter on DSK11XQN23PROD with NOTICES1