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[Federal Register Volume 89, Number 246 (Monday, December 23, 2024)]
[Notices]
[Page 104594]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-30600]

[[Page 104594]]

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SECURITIES AND EXCHANGE COMMISSION

[Securities Act of 1933 Release No. 11345/December 18, 2024; Securities 
Exchange Act of 1934 Release No. 101950/December 18, 2024]

Order Approving Public Company Accounting Oversight Board Budget 
and Annual Accounting Support Fee for Calendar Year 2025

    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. Section 982 of 
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 
Securities and Exchange Commission (the ``Commission''). The PCAOB 
accomplishes these investor protection and public interest goals 
through the registration of public accounting firms, standard setting, 
inspections, and investigation and disciplinary programs. The PCAOB is 
subject to the comprehensive oversight of the Commission.
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    \1\ 15 U.S.C. 7201 et seq.
    \2\ Public Law 111-203, 124 Stat. 1376 (2010).
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    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 registered 
brokers and dealers.
    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 (the ``Budget Rule'') governs the Commission's review and 
approval of PCAOB budgets and annual accounting support fees.\3\ The 
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 provide 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.
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    \3\ 17 CFR 202.190.
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    In accordance with the Budget Rule, in March 2024 the PCAOB 
provided the Commission with a narrative description of its program 
issues and outlook for the 2025 budget year. In response, the 
Commission provided the PCAOB with general budgetary guidance for the 
2025 budget year. The PCAOB subsequently delivered a preliminary budget 
and budget justification to the Commission. Staff from the Commission's 
Office of the Chief Accountant and Office of Financial Management 
dedicated a substantial amount of time to the review and analysis of 
the PCAOB's programs, projects, and budget estimates and participated 
in a number of meetings with staff of the PCAOB to further develop an 
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 issued a ``passback'' letter to the PCAOB on October 30, 
2024. On November 21, 2024, the PCAOB adopted its 2025 budget and 
accounting support fee 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 2025 budget adopted by the PCAOB that are 
not properly recoverable through the annual accounting support fee, and 
the Commission believes that the aggregate proposed 2025 annual 
accounting support fee does not exceed the PCAOB's aggregate 
recoverable budget expenses for 2025.
    The Commission continues to emphasize the importance of the PCAOB's 
identification of efficiencies and process improvements. Accordingly, 
the Commission requests that the PCAOB continue to evaluate its 
operational efficiency, improvements, and budgetary needs and submit 
such assessments to the Commission in connection with the 2026 budget 
cycle.
    Coordination between the Commission and PCAOB continues to be 
important. The Commission directs the PCAOB during 2025 to continue to 
hold quarterly meetings, as necessary, with the Commission's staff to 
discuss important policy initiatives, changes related to program areas, 
and significant impacts to the PCAOB's 2025 budget, including 
significant differences between actual and budgeted amounts and 
anticipated cost-savings. Separately, the Commission directs the PCAOB 
to continue its written quarterly updates on recent activities, 
including strategic initiatives. The Commission expects the PCAOB to 
make itself available to meet with individual Commissioners on these 
and other topics. Further, the Commission requests that the PCAOB 
submit its 2024 annual report to the Commission by March 31, 2025.
    The Commission understands that the Office of Management and Budget 
(``OMB'') has determined that the 2025 budget of the PCAOB is subject 
to sequestration under the Budget Control Act of 2011.\4\ For 2024, the 
PCAOB sequestered $21.9 million. That amount will become available in 
2025. For 2025, the sequestration amount will be 5.7% or $22.8 million. 
Consequently, we expect the PCAOB will have approximately $0.9 million 
less funds available from the 2024 sequestration for spending in 2025. 
Accordingly, the PCAOB should submit a revised spending plan for 2025 
reflecting a $0.9 million reduction to budgeted expenditures as a 
result of the increase in sequestration amount from 2024 to 2025.
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    \4\ OMB Report to the Congress on the BBEDCA 251A Sequestration 
for Fiscal Year 2025 (Mar. 11, 2024), available at https://www.whitehouse.gov/wp-content/uploads/2024/03/BBEDCA_251A_Sequestration_Report_FY2025.pdf.
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    The Commission has determined that the PCAOB's 2025 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 2025 are approved.

    By the Commission.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-30600 Filed 12-20-24; 8:45 am]
BILLING CODE 8011-01-P
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