29092 Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–60107; File No. PCAOB– 

2008–04] 

Public Company Accounting Oversight 

Board; Notice of Filing of Proposed 

Rules on Annual and Special 

Reporting by Registered Public 

Accounting Firms 

June 12, 2009. 

Pursuant to Section 107(b) of the 

Sarbanes-Oxley Act of 2002 (the ‘‘Act’’), 

notice is hereby given that on June 10, 

2008, the Public Company Accounting 

Oversight Board (the ‘‘Board’’ or 

‘‘PCAOB’’) filed with the Securities and 

Exchange Commission (the 

‘‘Commission’’ or ‘‘SEC’’) the proposed 

rules described in Items I and II below, 

which items have been prepared by the 

Board. The Commission is publishing 

this notice to solicit comments on the 

proposed rules from interested persons. 

I. Board’s Statement of the Terms of 

Substance of the Proposed Rule 

On June 10, 2008, the Board adopted 

rules consisting of eight new rules 

(PCAOB Rules 2200–2207) concerning 

annual and special reporting by 

registered public accounting firms, 

instructions to two forms to be used for 

such reporting (Form 2 and Form 3), 

and related amendments to existing 

Board Rules. The proposed rules text is 

set out below. 

Section 2. Registration and Reporting 

Part 2—Reporting 

2200. Annual Report 

Each registered public accounting 

firm must file with the Board an annual 

report on Form 2 by following the 

instructions to that form. Unless 

directed otherwise by the Board, the 

registered public accounting firm must 

file such annual report and exhibits 

thereto electronically with the Board 

through the Board’s Web-based system. 

2201. Time for Filing of Annual Report 

Each registered public accounting 

firm must file the annual report on Form 

2 no later than June 30 of each year, 

provided, however, that a registered 

public accounting firm that has its 

application for registration approved by 

the Board in the period between and 

including April 1 and June 30 of any 

year shall not be required to file an 

annual report in that year. 

Note: Pursuant to Rule 1002, in any year 

in which the filing deadline falls on a 

Saturday, Sunday, or federal legal holiday, 

the deadline for filing the annual report shall 

be the next day that is not a Saturday, 

Sunday, or federal legal holiday. 

2202. Annual Fee 

Each registered public accounting 

firm must pay an annual fee to the 

Board on or before July 31 of any year 

in which the firm is required to file an 

annual report on Form 2. The Board 

will, from time to time, announce the 

current annual fee. No portion of the 

annual fee is refundable. 

2203. Special Reports 

(a) A registered public accounting 

firm must file a special report on Form 

3 to report information to the Board as 

follows— 

(1) Upon the occurrence, on or after 

[effective date of this rule], of any event 

specified in Form 3, a registered public 

accounting firm must report the event in 

a special report filed no later than thirty 

days after the occurrence of the event; 

(2) No later than thirty days after 

receiving notice of Board approval of its 

application for registration, a registered 

public accounting firm that becomes 

registered after [effective date of this 

rule] must file a special report to report 

any event specified in Form 3 that 

occurred after the date used by the firm 

for purposes of General Instruction 9 to 

Form 1 and before the date that the 

Board approved the firm’s registration; 

and 

(3) No later than [date thirty days after 

the effective date of this rule], a 

registered public accounting firm that is 

registered as of [effective date of this 

rule], must file a special report to report, 

to the extent applicable to the firm, 

certain information described in General 

Instruction 4 to Form 3 and current as 

of [effective date of this rule]. 

(b) A registered public accounting 

firm required to file a special report 

shall do so by filing with the Board a 

special report on Form 3 in accordance 

with the instructions to that form. 

Unless directed otherwise by the Board, 

a registered public accounting firm must 

file such special report and exhibits 

thereto electronically with the Board 

through the Board’s Web-based system. 

2204. Signatures 

Each signatory to a report on Form 2 

or Form 3 shall manually sign a 

signature page or other document 

authenticating, acknowledging or 

otherwise adopting his or her signature 

that appears in typed form within the 

electronic submission. Such document 

shall be executed before or at the time 

the electronic submission is made and 

shall be retained by the filer for a period 

of seven years. Upon request, an 

electronic filer shall provide to the 

Board or its staff a copy of all 

documents retained pursuant to this 

Rule. 

2205. Amendments 

Amendments to a filed report on 

Form 2 or Form 3 shall be made by 

filing an amended report on Form 2 or 

Form 3 in accordance with the 

instructions to those forms concerning 

amendments. Amendments shall not be 

filed to update information in a report 

that was correct at the time the report 

was filed, but only to correct 

information that was incorrect at the 

time the report was filed or to provide 

information that was omitted from the 

report and was required to be provided 

at the time the report was filed. 

2206. Date of Filing 

(a) An annual report shall be deemed 

to be filed on the date on which the 

registered public accounting firm 

submits a Form 2 in accordance with 

Rule 2200 that includes the signed 

certification required in Part X of Form 

2. 

(b) A special report on Form 3 shall 

be deemed to be filed on the date that 

the registered public accounting firm 

submits a Form 3 in accordance with 

Rule 2203 that includes the signed 

certification required in Part VIII of 

Form 3. 

2207. Assertions of Conflicts With NonU.S. Laws 

If, in a report on Form 2 or Form 3, 

a foreign registered public accounting 

firm omits any information or 

affirmation required by the instructions 

to the relevant form on the ground that 

it cannot provide such information or 

affirmation on the form filed with the 

Board without violating non-U.S. law, 

the foreign registered public accounting 

firm shall— 

(a) In accordance with the 

instructions to the form— 

(1) Indicate that it has omitted 

required information or affirmations on 

the ground that it cannot provide such 

information or affirmations on the form 

filed with the Board without violating 

non-U.S. law; 

(2) Identify all Items on the form with 

respect to which it has withheld any 

required information or affirmation on 

that ground; and 

(3) Represent that, with respect to all 

such omitted information or 

affirmations, the foreign registered 

public accounting firm has satisfied the 

requirements of paragraph (b) of this 

Rule and has in its possession the 

materials required by paragraph (c) of 

this Rule; 

Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 29093 

(b) Before filing the form with the 

Board, make reasonable, good faith 

efforts, where not prohibited by law, to 

seek any consents or waivers that would 

be sufficient to allow it to provide the 

required information or affirmation on 

the form filed with the Board without 

violating non-U.S. law; 

(c) Have in its possession, before the 

date on which the foreign registered 

public accounting firm files the form 

with the Board and for a period of seven 

years thereafter— 

(1) An electronic version of the form 

that includes all information required 

by the instructions to the form 

(including certification and signature) 

and a manually signed signature page or 

other document that would satisfy the 

requirement of Rule 2204 if that version 

of the form were filed with the Board; 

(2) A copy of the provisions of nonU.S. law that the foreign registered 

public accounting firm asserts prohibit 

it from providing the required 

information or affirmations on the form 

filed with the Board, and an English 

translation of any such provisions that 

are not in English; 

(3) A legal opinion, in English, 

addressed to the foreign registered 

public accounting firm and that the 

foreign registered public accounting 

firm has reason to believe is current 

with respect to the relevant point of law, 

that the firm cannot provide the omitted 

information or affirmation on the form 

filed with the Board without violating 

non-U.S. law; 

(4) A written representation, in 

English, that the Firm has made 

reasonable efforts, and a written 

description of those efforts, to obtain 

consents or waivers that would be 

sufficient to allow it to provide the 

required information or affirmation on 

the form filed with the Board, manually 

signed by the same person whose 

signature appears in the certification 

portion of the form, and indicating that 

the signer has reviewed the description 

and that the description is, based on the 

signer’s knowledge, accurate and does 

not contain any untrue statements of 

material fact or omit to state a material 

fact necessary to make the statements 

made not misleading, and dated— 

(i) For Form 2, after the end of the 

reporting period and no later than the 

date of the Form 2 filing; and 

(ii) For Form 3, after the date of the 

reportable event and no later than the 

date of the Form 3 filing; 

(d) Not later than the fourteenth day 

after any request by the Board or by the 

Director of the Division of Registration 

and Inspections for any of the 

documents described in subparagraphs 

(2)–(4) of paragraph (c) of this Rule, file 

an amended report on Form 2 or Form 

3 including, as an exhibit to the 

amended report, the requested 

documents; and 

(e) Not later than the fourteenth day 

after any request by the Board for any 

of the information included in the 

document described in subparagraph (1) 

of paragraph (c) of this Rule, file an 

amended report on Form 2 or Form 3 

including the requested information. 

Note: Rule 2207(c)(1) does not require that 

the version of the form maintained by the 

firm include any affirmation required by Part 

IX of Form 2. If the firm withholds any such 

affirmation, however, the asserted legal 

conflict must be addressed in accordance 

with subparagraphs (2)–(4) of Rule 2207(c). 

Note: Rule 2207(c)(1) does not require a 

firm to include on the form maintained by 

the firm any information (1) that the firm 

does not possess, and (2) as to which the firm 

asserts that the firm would violate non-U.S. 

law by requiring another person to provide 

the information to the firm. The asserted 

legal conflict that prevents the firm from 

requiring another person to provide the 

information to the firm, however, must be 

addressed in accordance with subparagraphs 

(2)–(4) of Rule 2207(c). 

Note: The ‘‘reasonable efforts’’ element of 

Rule 2207(c)(4) does not require a firm to 

renew efforts to seek consents or waivers 

from parties who have previously declined to 

provide consents or waivers with respect to 

disclosure of similar types of information and 

does not require a firm to seek consents or 

waivers from parties other than firm 

personnel and firm clients. 

Forms 

Form 2—Annual Report Form 

General Instructions 

1. Submission of this Report. A 

registered public accounting firm must 

use this Form to file with the Board the 

annual report required by Section 

102(d) of the Act and Rule 2200 and to 

file any amendments to an annual 

report. Unless otherwise directed by the 

Board, the Firm must file this Form, and 

all exhibits to this Form, electronically 

with the Board through the Board’s 

Web-based system. 

2. Defined Terms. The definitions in 

the Board’s rules apply to this Form. 

Italicized terms in the instructions to 

this Form are defined in the Board’s 

rules. In addition, as used in the 

instructions to this Form, the term ‘‘the 

Firm’’ means the registered public 

accounting firm that is filing this Form 

with the Board. 

3. When Report is Considered Filed. 

Annual reports on this Form are 

required to be filed each year on or 

before June 30, subject to the 

qualification in Rule 2201 concerning 

any firm that has its application for 

registration approved by the Board in 

the period between and including April 

1 and June 30. An annual report is 

considered filed when the Firm has 

submitted to the Board a Form 2 in 

accordance with Rule 2200 that 

includes the signed certification 

required in Part X of Form 2. 

4. Period Covered by this Report. 

Annual reports on this Form shall cover 

a 12-month period from April 1 to 

March 31, subject to the qualification in 

Part VIII of Form 2 relating to the first 

annual report filed by a firm that 

becomes registered after [effective date 

of Rule 2201]. In the instructions to this 

Form, this is the period referred to as 

the ‘‘reporting period.’’ 

5. Amendments to this Report. 

Amendments shall not be filed to 

update information in a filed Form 2 

that was correct at the time the Form 

was filed, but only to correct 

information that was incorrect at the 

time the Form was filed or to provide 

information that was omitted from the 

Form and was required to be provided 

at the time the Form was filed. When 

filing a Form 2 to amend an earlier filed 

Form 2, the Firm must supply not only 

the corrected or supplemental 

information, but must include in the 

amended Form 2 all information, 

affirmations, and certifications that were 

required to be included in the original 

Form 2. The Firm may access the 

originally filed Form 2 through the 

Board’s Web-based system and make the 

appropriate amendments without 

needing to re-enter all other 

information. 

Note: The Board will designate an 

amendment to an annual report as a report 

on ‘‘Form 2/A.’’ 

6. Rules Governing this Report. In 

addition to these instructions, the rules 

contained in Part 2 of Section 2 of the 

Board’s rules govern this Form. Please 

read these rules and the instructions 

carefully before completing this Form. 

7. Requests for Confidential 

Treatment. The Firm may, by marking 

the Form in accordance with the 

instructions provided, request 

confidential treatment of any 

information submitted in Part VI, Part 

VII, or Exhibit 99.3 of this Form that has 

not otherwise been publicly disclosed 

and that either contains information 

reasonably identified by the Firm as 

proprietary information or that is 

protected from public disclosure by 

applicable laws related to 

confidentiality of proprietary, personal, 

or other information. See Rule 2300. 

Foreign registered public accounting 

firm’s may also request confidential 

29094 Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 

treatment for Item 3.2 and Exhibit 3.2, 

though U.S. firms may not do so. If the 

Firm requests confidential treatment, it 

must identify the information in Part VI, 

Part VII, or Exhibit 99.3 (or, for a foreign 

registered public accounting firm, Item 

3.2 and Exhibit 3.2) that it desires to 

keep confidential, and include, as 

Exhibit 99.1 to this Form, an exhibit that 

complies with the requirements of Rule 

2300(c)(2). The Board will determine 

whether to grant confidential treatment 

requests on a case-by-case basis. If the 

Firm fails to include Exhibit 99.1, or 

includes an Exhibit 99.1 that fails to 

comply with Rule 2300(c)(2), the 

request for confidential treatment may 

be denied solely on the basis of that 

failure. 

8. Assertions of Conflicts with NonU.S. Law. If the Firm is a foreign 

registered public accounting firm, the 

Firm may, unless otherwise directed by 

the Board pursuant to Rule 2207(e), 

decline to provide certain information 

and affirmations required by this Form 

if the Firm could not provide such 

information or affirmations without 

violating non-U.S. law and the Firm 

proceeds in accordance with Rule 2207. 

The Firm may withhold responsive 

information and affirmations on that 

basis from any Part of the Form other 

than Parts I, II, and X and Items 3.1.a, 

3.1.b, 3.1.d, and 4.1. If the firm 

withholds responsive information or 

affirmations, the Firm must indicate, in 

accordance with the instructions in the 

relevant Part of the Form, the particular 

Items with respect to which the Firm 

has withheld responsive information or 

a required affirmation. The Firm may 

not use the Form to make any general 

assertion that a particular requirement 

may conflict with non-U.S. law, but 

only to indicate that, on the basis of an 

asserted conflict, the Firm has in fact 

withheld from this Form required 

information or a required affirmation. 

9. Language. Information submitted as 

part of this Form, including any exhibit 

to this Form, must be in the English 

language. 

Part I—Identity of the Firm and Contact 

Persons 

In Part I, the Firm should provide 

information that is current as of the date 

of the certification in Part X. 

Item 1.1 Name of the Firm 

a. State the legal name of the Firm. 

b. If different than its legal name, state 

the name or names under which the 

Firm issues audit reports, or issued any 

audit report during the reporting period. 

c. If the Firm’s legal name at the 

beginning of the reporting period was 

different than the name provided under 

Item 1.1.a, state that legal name and any 

other legal name the Firm had during 

the reporting period. Include the legal 

name of any registered public 

accounting firm that merged into, or was 

acquired by, the Firm during the 

reporting period. 

Item 1.2 Contact Information of the 

Firm 

a. State the physical address (and, if 

different, mailing address) of the Firm’s 

headquarters office. 

b. State the telephone number and 

facsimile number of the Firm’s 

headquarters office. If available, state 

the Web site address of the Firm. 

Item 1.3 Primary Contact With the 

Board 

State the name, business title, 

physical business address (and, if 

different, business mailing address), 

business telephone number, business 

facsimile number, and business e-mail 

address of a partner or authorized 

officer of the Firm who will serve as the 

Firm’s primary contact with the Board, 

including for purposes of the annual 

report filed on this Form and any 

special reports filed on Form 3. 

Part II—General Information 

Concerning This Report 

Item 2.1 Reporting Period 

State the reporting period covered by 

this report. 

Note: The reporting period, which the Firm 

should enter in Item 2.1, is the period 

beginning on April 1 of the year before the 

year in which the annual report is required 

to be filed and ending March 31 of the year 

in which the annual report is required to be 

filed. That is the period referred to where this 

Form refers to the ‘‘reporting period.’’ Note, 

however, the special instruction at the 

beginning of Part VIII concerning the first 

annual report filed by certain firms. 

Item 2.2 Amendments 

If this is an amendment to a report 

previously filed with the Board— 

a. Indicate, by checking the box 

corresponding to this item, that this is 

an amendment. 

b. Identify the specific Item numbers 

of this Form (other than this Item 2.2) 

as to which the Firm’s response has 

changed from that provided in the most 

recent Form 2 or amended Form 2 filed 

by the Firm with respect to the reporting 

period. 

Part III—General Information 

Concerning the Firm 

Item 3.1 The Firm’s Practice Related to 

the Registration Requirement 

a. Indicate whether the Firm issued 

any audit report with respect to an 

issuer during the reporting period. 

b. In the event of an affirmative 

response to Item 3.1.a, indicate whether 

the issuers with respect to which the 

Firm issued audit reports during the 

reporting period were limited to 

employee benefit plans that file reports 

with the Commission on Form 11–K. 

c. In the event of a negative response 

to Item 3.1.a, indicate whether the Firm 

played a substantial role in the 

preparation or furnishing of an audit 

report with respect to an issuer during 

the reporting period. 

d. In the event of a negative response 

to both Items 3.1.a and 3.1.c, indicate 

whether, during the reporting period, 

the Firm issued any document with 

respect to financial statements of a nonissuer broker-dealer in which the Firm 

either set forth an opinion on the 

financial statements or asserted that no 

such opinion can be expressed. 

Item 3.2 Fees Billed to Issuer Audit 

Clients 

a. Of the total fees billed by the Firm 

to all clients for services that were 

rendered in the reporting period, state 

the percentage (which may be rounded, 

but no less specifically than to the 

nearest five percent) attributable to fees 

billed to issuer audit clients for— 

1. Audit services; 

2. Other accounting services; 

3. Tax services; and 

4. Non-audit services. 

b. Indicate, by checking the 

appropriate box, which of the following 

two methods the Firm used to calculate 

the percentages reported in Item 3.2.a— 

1. The Firm used as a denominator 

the total fees billed to all clients for 

services rendered during the reporting 

period and used as numerators (for each 

of the four categories) total fees billed to 

issuer audit clients for the relevant 

services rendered during the reporting 

period. 

2. The Firm used as a denominator 

the total fees billed to all clients in the 

Firm’s fiscal year that ended during the 

reporting period and used as numerators 

(for each of the four categories) total 

issuer audit client fees as determined by 

reference to the fee amounts disclosed 

to the Commission by those clients for 

each client’s fiscal year that ended 

during the reporting period (including, 

for clients who have not made the 

required Commission filings, the fee 

amounts required to be disclosed). 

Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 29095 

c. If the Firm has used a reasonable 

method to estimate the components of 

the calculations described in Item 3.2.b, 

rather than using the specific data, 

check this box and attach Exhibit 3.2 

briefly describing the reasons for doing 

so and the methodology used in making 

those estimates. 

Note: In responding to Item 3.2, careful 

attention should be paid to the definitions of 

the italicized terms, which are found in 

Board Rules 1001(i)(iii) (issuer), 1001(a)(v) 

(audit), 1001(a)(vii) (audit services), 

1001(o)(i) (other accounting services), 

1001(t)(i) (tax services), and 1001(n)(ii) (nonaudit services). The definitions of the four 

categories of services correspond to the 

Commission’s descriptions of the services for 

which an issuer must disclose fees paid to its 

auditor. Compare the descriptions of services 

in Item 9(e) of Commission Schedule 14A (17 

CFR § 240.14a–101) under the headings 

‘‘Audit Fees,’’ ‘‘Audit-Related Fees,’’ ‘‘Tax 

Fees,’’ and ‘‘All Other Fees’’ with, 

respectively, the Board’s definitions of Audit 

Services, Other Accounting Services, Tax 

Services, and Non-Audit Services. 

Part IV—Audit Clients and Audit 

Reports 

Item 4.1 Audit Reports Issued by the 

Firm 

a. Provide the following information 

concerning each issuer for which the 

Firm issued any audit report(s) during 

the reporting period— 

1. The issuer’s name; 

2. The issuer’s CIK number, if any; 

and 

3. The date(s) of the audit report(s). 

b. If the Firm identified any issuers in 

response to Item 4.1.a., indicate, by 

checking the box corresponding to the 

appropriate range set out below, the 

total number of Firm personnel who 

exercised the authority to sign the 

Firm’s name to an audit report during 

the reporting period. If the Firm checks 

the box indicating that the number is in 

the range of 1–9, provide the exact 

number. 

1–9 

10–25 

26–50 

51–100 

101–200 

More than 200 

Note: In responding to Item 4.1, careful 

attention should be paid to the definition of 

audit report, which is found in Rule 

1001(a)(vi) of the Board’s Rules, and which 

does not encompass reports prepared for 

entities that are not issuers, as that term is 

defined in Rule 1001(i)(iii). Careful attention 

should also be paid to the definition of 

issuer. The Firm should not, for example, 

overlook the fact that investment companies 

may be issuers, or that employee benefit 

plans that file reports on Commission Form 

11–K are issuers. 

Note: In responding to Item 4.1, do not list 

any issuer more than once. For each issuer, 

provide in Item 4.1.a.3 the audit report dates 

(as described in AU 530, Dating of the 

Independent Auditor’s Report) of all such 

audit reports for that issuer, including each 

date of any dual-dated audit report. 

Note: Note: In responding to Item 4.1.a.3, 

it is not necessary to provide the date of any 

consent to an issuer’s use of an audit report 

previously issued for that issuer, except that, 

if such consents constitute the only instances 

of the Firm issuing audit reports for a 

particular issuer during the reporting period, 

the Firm should include that issuer in Item 

4.1 and include the dates of such consents in 

Item 4.1.a.3. 

Item 4.2 Audit Reports With Respect to 

Which the Firm Played a Substantial 

Role During the Reporting Period 

a. If no issuers are identified in 

response to Item 4.1.a, but the Firm 

played a substantial role in the 

preparation or furnishing of an audit 

report that was issued during the 

reporting period, provide the following 

information concerning each issuer with 

respect to which the Firm did so— 

1. The issuer’s name; 

2. The issuer’s CIK number, if any; 

3. The name of the registered public 

accounting firm that issued the audit 

report(s); 

4. The end date(s) of the fiscal 

period(s) covered by the financial 

statements that were the subject of the 

audit report(s); and 

5. A description of the substantial role 

played by the Firm with respect to the 

audit report(s). 

Note: If the Firm identifies any issuer in 

response to Item 4.1, the Firm need not 

respond to Item 4.2. 

Note: In responding to Item 4.2, do not list 

any issuer more than once. 

Part V—Offices and Affiliations 

In Part V, the Firm should provide 

information that is current as of the last 

day of the reporting period. 

Item 5.1 Firm’s Offices 

List the physical address and, if 

different, the mailing address, of each of 

the Firm’s offices. 

Item 5.2 Audit-related Memberships, 

Affiliations, or Similar Arrangements 

a. State whether the Firm has any: 

1. Membership or affiliation in or 

with any network, arrangement, 

alliance, partnership or association that 

licenses or authorizes audit procedures 

or manuals or related materials, or the 

use of a name in connection with the 

provision of audit services or 

accounting services; 

2. Membership or affiliation in or 

with any network, arrangement, 

alliance, partnership or association that 

markets or sells audit services or 

through which joint audits are 

conducted; or 

3. Arrangement, whether by contract 

or otherwise, with another entity 

through or from which the Firm 

employs or leases personnel to perform 

audit services. 

b. If the Firm provides an affirmative 

response to Item 5.2.a, identify, by name 

and address, the entity with which the 

Firm has each such relationship, and 

provide a brief description of each such 

relationship. 

Note: Item 5.2.b does not require 

information concerning every other entity 

that is part of the network, arrangement, 

alliance, partnership or association, but only 

information concerning the network, 

arrangement, alliance, partnership, or 

association itself, or the principal entity 

through which it operates. 

Part VI—Personnel 

In Part VI, the Firm should provide 

information that is current as of the last 

day of the reporting period. 

Item 6.1 Number of Firm Personnel 

Provide the following numerical 

totals— 

a. Total number of the Firm’s 

accountants; 

b. Total number of the Firm’s certified 

public accountants (include in this 

number all accountants employed by 

the Firm with comparable licenses from 

non-U.S. jurisdictions); and 

c. Total number of the Firm’s 

personnel. 

Part VII—Certain Relationships 

Item 7.1 Individuals With Certain 

Disciplinary or Other Histories 

a. Other than a relationship required 

to be reported in Item 4.1 of Form 3, and 

only if the Firm has not previously 

identified the individual and the 

sanction or Commission order on Form 

1, Form 2, or Form 3, state whether, as 

of the end of the reporting period, the 

Firm has any employee, partner, 

shareholder, principal, member, or 

owner who was the subject of a Board 

disciplinary sanction or a Commission 

order under Rule 102(e) of the 

Commission’s Rules of Practice, entered 

within the five years preceding the end 

of the reporting period and without that 

sanction or order having been vacated 

on review or appeal, and who provided 

at least ten hours of audit services for 

any issuer during the reporting period. 

b. If the Firm provides an affirmative 

response to Item 7.1.a, provide— 

29096 Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 

1. The name of each such individual; 

2. A description of the nature of the 

relationship; 

3. The date that the Firm entered into 

the relationship; and 

4. The date of the relevant order and 

an indication whether it was a Board 

order or a Commission order. 

Item 7.2 Entities With Certain 

Disciplinary or Other Histories 

a. Other than a relationship required 

to be reported in Item 4.2 of Form 3, and 

only if the Firm has not previously 

reported the information on Form 1, 

Form 2, or Form 3, state whether, as of 

the end of the reporting period, the Firm 

was owned or partly owned by an entity 

that was the subject of (a) a Board 

disciplinary sanction entered within the 

five years preceding the end of the 

reporting period, which has not been 

vacated on review or appeal, 

suspending or revoking that entity’s 

registration or disapproving that entity’s 

application for registration, or (b) a 

Commission order under Rule 102(e) of 

the Commission’s Rules of Practice 

entered within the five years preceding 

the end of the reporting period, which 

has not been vacated on appeal, 

suspending or denying the privilege of 

appearing or practicing before the 

Commission. 

b. If the Firm provides an affirmative 

response to Item 7.2.a, provide— 

1. The name of each such entity; 

2. A description of the nature of the 

relationship; 

3. The date that the Firm entered into 

the relationship; and 

4. The date of the relevant order and 

an indication whether it was a Board 

order or a Commission order. 

Item 7.3 Certain Arrangements To 

Receive Consulting or Other 

Professional Services 

a. Other than a relationship required 

to be reported in Item 4.3 of Form 3, 

state whether the Firm received, or 

entered into a contractual or other 

arrangement to receive, from any 

individual or entity meeting the criteria 

described in Items 7.1.a or 7.2.a, 

consulting or other professional services 

related to the Firm’s audit practice or 

related to services the Firm provides to 

issuer audit clients. 

b. If the Firm provides an affirmative 

response to Item 7.3.a, provide— 

1. The name of each such individual 

or entity; 

2. A description of the nature of the 

relationship; 

3. The date that the Firm entered into 

the relationship; 

4. A description of the services 

provided or to be provided to the Firm 

by the individual or entity; and 

5. The date of the relevant order and 

an indication whether it was a Board 

order or a Commission order. 

Part VIII—Acquisition of Another 

Public Accounting Firm or Substantial 

Portions of Another Public Accounting 

Firm’s Personnel 

If the Firm became registered on or 

after [effective date of Rule 2201], the 

first annual report that the Firm files 

must provide this information for the 

period running from the date used by 

the Firm for purposes of General 

Instruction 9 of Form 1 (regardless of 

whether that date was before or after the 

beginning of the reporting period) 

through March 31 of the year in which 

the annual report is required to be filed. 

Item 8.1 Acquisition of Another Public 

Accounting Firm or Substantial Portions 

of Another Public Accounting Firm’s 

Personnel 

a. State whether the Firm acquired 

another public accounting firm. 

b. If the Firm provides an affirmative 

response to Item 8.1.a, provide the 

name(s) of the public accounting firm(s) 

that the Firm acquired. 

c. State whether the Firm, without 

acquiring another public accounting 

firm, took on as employees, partners, 

shareholders, principals, members, or 

owners 75% or more of the persons 

who, as of the beginning of the reporting 

period, were the partners, shareholders, 

principals, members, or owners of 

another public accounting firm. 

d. If the Firm provides an affirmative 

response to Item 8.1.c, provide the name 

of the other public accounting firm and 

the number of the other public 

accounting firm’s former partners, 

shareholders, principals, members, 

owners, and accountants that joined the 

Firm. 

Part IX—Affirmation of Consent 

Item 9.1 Affirmation of Understanding 

of, and Compliance With, Consent 

Requirements 

Whether or not the Firm, in applying 

for registration with the Board, provided 

the signed statement required by Item 

8.1 of Form 1, affirm that— 

a. The Firm has consented to 

cooperate in and comply with any 

request for testimony or the production 

of documents made by the Board in 

furtherance of its authority and 

responsibilities under the SarbanesOxley Act of 2002; 

b. The Firm has secured from each of 

its associated persons, and agrees to 

enforce as a condition of each such 

person’s continued employment by or 

other association with the Firm, a 

consent indicating that the associated 

person consents to cooperate in and 

comply with any request for testimony 

or the production of documents made 

by the Board in furtherance of its 

authority under the Sarbanes-Oxley Act 

of 2002, and that the associated person 

understands and agrees that such 

consent is a condition of his or her 

continued employment by or other 

association with the Firm; and 

c. The Firm understands and agrees 

that cooperation and compliance, as 

described in Item 9.1.a, and the securing 

and enforcing of consents from its 

associated persons as described in Item 

9.1.b, is a condition to the continuing 

effectiveness of the registration of the 

Firm with the Board. 

Note 1: The affirmation in Item 9.1.b shall 

not be understood to include an affirmation 

that the Firm has secured such consents from 

any associated person that is a registered 

public accounting firm. 

Note 2: The affirmation in Item 9.1.b shall 

not be understood to include an affirmation 

that the Firm has secured such consents from 

any associated person that is a foreign public 

accounting firm in circumstances where that 

associated person asserts that non-U.S. law 

prohibits it from providing the consent, so 

long as the Firm possesses in its files 

documents relating to the associated person’s 

assertion about non-U.S. law that would be 

sufficient to satisfy the requirements of 

subparagraphs (2) through (4) of Rule 2207(c) 

if that associated person were a registered 

public accounting firm filing a Form 2 and 

withholding this affirmation. This exception 

to the affirmation in Item 9.1.b does not 

relieve the Firm of its obligation to enforce 

cooperation and compliance with Board 

demands by any such associated person as a 

condition of continued association with the 

Firm. 

Note 3: If the Firm is a foreign registered 

public accounting firm, the affirmations in 

Item 9.1 that relate to associated persons 

shall be understood to encompass every 

accountant who is a proprietor, partner, 

principal, shareholder, officer, or audit 

manager of the Firm and who provided at 

least ten hours of audit services for any issuer 

during the reporting period. 

Part X—Certification of the Firm 

Item 10.1 Signature of Partner or 

Authorized Officer 

This Form must be signed on behalf 

of the Firm by an authorized partner or 

officer of the Firm including, in 

accordance with Rule 2204, both a 

signature that appears in typed form 

within the electronic submission and a 

corresponding manual signature 

retained by the Firm. The signer must 

certify that— 

a. the signer is authorized to sign this 

Form on behalf of the Firm; 

Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 29097 

b. the signer has reviewed this Form; 

c. based on the signer’s knowledge, 

the Firm has filed a special report on 

Form 3 with respect to each event that 

occurred before the end of the reporting 

period and for which a special report on 

Form 3 is required under the Board’s 

rules; 

d. based on the signer’s knowledge, 

this Form does not contain any untrue 

statement of a material fact or omit to 

state a material fact necessary to make 

the statements made, in light of the 

circumstances under which such 

statements were made, not misleading; 

and 

e. either— 

1. based on the signer’s knowledge, 

the Firm has not failed to include in this 

Form any information or affirmation 

that is required by the instructions to 

this Form, or 

2. based on the signer’s knowledge— 

(A) the Firm is a foreign registered 

public accounting firm and has not 

failed to include in this Form any 

information or affirmation that is 

required by the instructions to this Form 

except for information or affirmations 

that the Firm asserts it cannot provide 

to the Board on this Form 2 without 

violating non-U.S. law; 

(B) with respect to any such withheld 

information or affirmation, the Firm has 

satisfied the requirements of PCAOB 

Rule 2207(b) and has in its possession 

the materials required by PCAOB Rule 

2207(c); and 

(C) the Firm has indicated, in 

accordance with the instructions to this 

Form, each Item of this Form with 

respect to which the Firm has withheld 

any required information or affirmation. 

The signature must be accompanied 

by the signer’s title, the capacity in 

which the signer signed the Form, the 

date of signature, and the signer’s 

business mailing address, business 

telephone number, business facsimile 

number, and business e-mail address. 

Part XI—Exhibits 

To the extent applicable under the 

foregoing instructions or the Board’s 

rules, each annual report must be 

accompanied by the following exhibits: 

Exhibit 3.2 Description of Methodology 

Used To Estimate Components of 

Calculation in Item 3.2 and Reasons for 

Using Estimates 

Exhibit 99.1 Request for Confidential 

Treatment 

Exhibit 99.3 Materials Required by 

Rule 2207(c)(2)–(4)—Submit Only as an 

Exhibit to an Amended Form 2 in 

Response to a Request Made Pursuant to 

Rule 2207(d) 

Form 3—Special Report Form 

General Instructions 

1. Submission of this Report. Effective 

[effective date of Rule 2203], a registered 

public accounting firm must use this 

Form to file special reports with the 

Board pursuant to Section 102(d) of the 

Act and Rule 2203 and to file any 

amendments to a special report. Unless 

otherwise directed by the Board, the 

Firm must file this Form, and all 

exhibits to this Form, electronically 

with the Board through the Board’s 

Web-based system. 

2. Defined Terms. The definitions in 

the Board’s rules apply to this Form. 

Italicized terms in the instructions to 

this Form are defined in the Board’s 

rules. In addition, as used in the 

instructions to this Form, the term ‘‘the 

Firm’’ means the registered public 

accounting firm that is filing this Form 

with the Board. 

3. When this Report is Required and 

When It is Considered Filed. Upon the 

occurrence of any event specified in 

Part II of this Form, the Firm must 

report the event on this Form by 

following the instructions to this Form. 

With respect to events that occur on or 

after [effective date of Rule 2203] and 

while the Firm is registered, the Firm 

must file the Form no later than thirty 

days after the occurrence of the event 

reported. Certain additional 

requirements apply, but they vary 

depending on whether a firm was 

registered as of [effective date of Rule 

2203]. A firm that becomes registered 

after [effective date of Rule 2203], must, 

within thirty days of receiving notice of 

Board approval of its registration 

application, file this Form to report any 

reportable events that occurred in a 

specified period before approval of the 

firm’s application for registration. See 

Rule 2203(a)(2). A firm that was 

registered as of [effective date of Rule 

2203], must, by [date 30 days after 

effective date of Rule 2203], file this 

Form to report certain additional 

information that is current as of 

[effective date of Rule 2203]. See Rule 

2203(a)(3) and General Instruction No. 4 

below. A special report shall be deemed 

to be filed on the date that the Firm 

submits a Form 3 in accordance with 

Rule 2203 that includes the signed 

certification required in Part VIII of 

Form 3. 

4. Required Filing to Bring Current 

Certain Information for Firms Registered 

as of [effective date of Rule 2203]. If the 

Firm is registered as of [effective date of 

Rule 2203], the Firm must file a special 

report on this Form no later than [date 

30 days after effective date of Rule 

2203], to report the information 

specified below, to the extent that it has 

not been reported on the Firm’s Form 1 

filing. The Firm must make this Form 3 

filing to report the following 

information even if the Firm has 

previously informally disclosed the 

information to the Board or its staff— 

a. Information responsive to Items 2.4 

through 2.9 and Item 4.1 if (1) the 

proceeding is pending as of [effective 

date of Rule 2203], and (2) the 

defendants or respondents as of that 

date include either the Firm or a person 

who is a partner, shareholder, principal, 

owner, member, or audit manager of the 

Firm as of that date; 

b. Information responsive to Items 

2.10 and 4.2 if (1) the conclusion of a 

proceeding as to any party specified 

there occurred after the date used by the 

firm for purposes of General Instruction 

9 to Form 1 and before [effective date of 

Rule 2203], and (2) the proceeding 

resulted in any conviction of, judgment 

against, imposition of any liability or 

sanction on, or Commission Rule 102(e) 

order against the Firm or any person 

who is a partner, shareholder, principal, 

owner, member, or audit manager of the 

Firm as of [effective date of Rule 2203]; 

c. Information responsive to Items 

2.11 and 4.3 if the Firm is the subject 

of a petition or proceeding described 

there as of [effective date of Rule 2203]; 

d. Information responsive to Items 

2.12 through 2.14 and Part V if (1) the 

relationship commenced after the date 

used by the firm for purposes of General 

Instruction 9 to Form 1, (2) the specified 

disciplinary sanction or Commission 

Rule 102(e) order continued to be in 

effect as of [effective date of Rule 2203], 

and (3) the specified relationship 

continues to exist as of [effective date of 

Rule 2203]; 

e. Information responsive to Items 

2.15 and 6.1 if (1) the loss of 

authorization relates to a jurisdiction or 

authority identified in Item 1.7 of the 

Firm’s Form 1 and, (2) as of [effective 

date of Rule 2203], the Firm continues 

to lack the specified authorization in 

that jurisdiction; 

f. Information responsive to Items 

2.16 and 6.2 if the license or 

certification is in effect as of [effective 

date of Rule 2203]; and 

29098 Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 

g. Information responsive to Items 

2.17 and 2.18 and Part VII that is current 

as of [effective date of Rule 2203] to the 

extent that it differs from the 

corresponding information provided on 

the Firm’s Form 1. 

5. Completing the Form. A firm filing 

this Form must always complete Parts I, 

II, and VIII of this Form. Parts III 

through VII should be completed to the 

extent applicable, as described more 

fully in the instructions to Part II of the 

Form. 

6. Amendments to this Report. 

Amendments shall not be filed to 

update information in a filed Form 3 

that was correct at the time the Form 

was filed, but only to correct 

information that was incorrect at the 

time the Form was filed or to provide 

information that was omitted from the 

Form and was required to be provided 

at the time the Form was filed. When 

filing a Form 3 to amend an earlier filed 

Form 3, the Firm must supply not only 

the corrected or supplemental 

information, but must include in the 

amended Form 3 all information, 

affirmations, and certifications that were 

required to be included in the original 

Form 3. The Firm may access the 

originally filed Form 3 through the 

Board’s Web-based system and make the 

appropriate amendments without 

needing to re-enter all other 

information. 

Note: The Board will designate an 

amendment to a special report as a report on 

‘‘Form 3/A.’’ 

7. Rules Governing this Report. In 

addition to these instructions, the rules 

contained in Part 2 of Section 2 of the 

Board’s rules govern this Form. Please 

read these rules and the instructions 

carefully before completing this Form. 

8. Requests for Confidential 

Treatment. The Firm may, by marking 

the Form in accordance with the 

instructions provided, request 

confidential treatment of any 

information submitted in Item 3.1.c, 

Part IV, Part V, Item 6.1.d, Item 7.1.d, or 

Exhibit 99.3 of this Form that has not 

otherwise been publicly disclosed and 

that either contains information 

reasonably identified by the Firm as 

proprietary information or that is 

protected from public disclosure by 

applicable laws related to 

confidentiality of proprietary, personal, 

or other information. See Rule 2300. If 

the Firm requests confidential 

treatment, it must identify the 

information in Item 3.1.c, Part IV, Part 

V, Item 6.1.d, Item 7.1.d, or Exhibit 99.3 

that it desires to keep confidential, and 

include, as Exhibit 99.1 to this Form, an 

exhibit that complies with the 

requirements of Rule 2300(c)(2). The 

Board will determine whether to grant 

confidential treatment requests on a 

case-by-case basis. If the Firm fails to 

include Exhibit 99.1, or includes an 

Exhibit 99.1 that fails to comply with 

Rule 2300(c)(2), the request for 

confidential treatment may be denied 

solely on the basis of that failure. 

9. Assertions of Conflicts with NonU.S. Law. If the Firm is a foreign 

registered public accounting firm, the 

Firm may, unless otherwise directed by 

the Board pursuant to Rule 2207(e), 

decline to provide certain information 

required by this Form if the Firm could 

not provide such information without 

violating non-U.S. law and the Firm 

proceeds in accordance with Rule 2207. 

The Firm may withhold responsive 

information on that basis from any Part 

of the Form other than Parts I, II, and 

VIII, and Items 7.1.a, 7.1.b, 7.1.c, and 

7.2. If the firm withholds responsive 

information, the Firm must indicate, in 

accordance with the instructions in the 

relevant Part of the Form, the particular 

Items with respect to which the Firm 

has withheld responsive information. 

The Firm may not use the Form to make 

any general assertion that a particular 

requirement may conflict with non-U.S. 

law, but only to indicate that, on the 

basis of an asserted conflict, the Firm 

has in fact withheld from this Form 

required information. 

10. Language. Information submitted 

as part of this Form, including any 

exhibit to this Form, must be in the 

English language. 

Part I—Identity of the Firm 

Item 1.1 Name of Firm 

a. State the legal name of the Firm. 

Note: If the Firm is filing this Form 3 to 

report that the Firm’s legal name has 

changed, the name entered in Item 1.1.a 

should be the Firm’s legal name before the 

name change that is being reported. The 

Firm’s new name should be included in the 

response to Item 1.1.c. 

b. If different than its legal name, state 

the name or names under which the 

Firm issues audit reports. 

c. If the Firm is filing this Form 3 to 

report that the Firm’s legal name has 

changed, state the new legal name of the 

Firm. 

Part II—Reason for Filing This Report 

Indicate, by checking the relevant 

box(es) from among Items 2.1 through 

2.18 below, the event(s) being reported 

on this Form. More than one event may 

be reported in the same Form 3 filing. 

For each event indicated below, proceed 

to the Parts and Items of this Form 

indicated parenthetically for the specific 

event being reported and provide the 

information therein described. Provide 

responses only to those Parts and Items 

of the Form specifically indicated for 

the event or events that the Firm 

identifies in this Part II as an event 

being reported on this Form. (For 

example, if the Form is being filed 

solely to report that the Firm has 

changed its name, check the box for 

Item 2.17 in this Part of the Form, and 

complete only Item 7.1 and Part VIII of 

the Form.) If the Firm is filing this Form 

to amend a previous filing, the Firm also 

should complete Item 2.19. 

Note: In Items 2.4 through 2.11 and Item 

2.15, the reportable event is described in 

terms of whether the Firm ‘‘has become 

aware’’ of certain facts. For these purposes, 

the Firm is deemed to have become aware of 

the relevant facts on the date that any 

partner, shareholder, principal, owner, or 

member of the Firm first becomes aware of 

the facts. 

Audit Reports 

Item 2.1 The Firm has withdrawn an 

audit report on financial 

statements, or withdrawn its 

consent to the use of its name in a 

report, document, or written 

communication containing an 

issuer’s financial statements, and 

the issuer has failed to comply with 

a Commission requirement to make 

a report concerning the matter 

pursuant to Item 4.02 of 

Commission Form 8–K. (Complete 

Item 3.1 and Part VIII.) 

Item 2.2 The Firm has issued audit 

reports with respect to more than 

100 issuers in a calendar year 

immediately following a calendar 

year in which the Firm did not 

issue audit reports with respect to 

more than 100 issuers. (Complete 

Part VIII.) 

Item 2.3 The Firm has issued audit 

reports with respect to 100 or fewer 

issuers in a completed calendar 

year immediately following a 

calendar year in which the Firm 

issued audit reports with respect to 

more than 100 issuers. (Complete 

Part VIII.) 

Certain Legal Proceedings 

Item 2.4 The Firm has become aware 

that the Firm has become a 

defendant in a criminal proceeding 

prosecuted by a governmental 

criminal law enforcement authority. 

(Complete Item 4.1 and Part VIII.) 

Item 2.5 The Firm has become aware 

that, in a matter arising out of his 

or her conduct in the course of 

providing audit services or other 

accounting services to an issuer, a 

partner, shareholder, principal, 

Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 29099 

owner, member, or audit manager 

of the Firm has become a defendant 

in a criminal proceeding prosecuted 

by a governmental criminal law 

enforcement authority. (Complete 

Item 4.1 and Part VIII.) 

Item 2.6 The Firm has become aware 

that a partner, shareholder, 

principal, owner, member, or audit 

manager of the Firm who provided 

at least ten hours of audit services 

for any issuer during the Firm’s 

current fiscal year or its most 

recently completed fiscal year has 

become a defendant in a criminal 

proceeding prosecuted by a 

governmental criminal law 

enforcement authority and is 

charged with fraud, embezzlement, 

forgery, extortion, bribery, 

obstruction of justice, perjury, or 

false statements; or charged with 

any crime arising out of alleged 

conduct relating to accounting, 

auditing, securities, banking, 

commodities, taxation, consumer 

protection, or insurance. (Complete 

Item 4.1 and Part VIII.) 

Item 2.7 The Firm has become aware 

that, in a matter arising out of the 

Firm’s conduct in the course of 

providing professional services for a 

client, the Firm has become a 

defendant or respondent in a civil 

or alternative dispute resolution 

proceeding initiated by a 

governmental entity or in an 

administrative or disciplinary 

proceeding other than a Board 

disciplinary proceeding. (Complete 

Item 4.1 and Part VIII.) 

Item 2.8 The Firm has become aware 

that, in a matter arising out of his 

or her conduct in the course of 

providing audit services or other 

accounting services to an issuer, a 

partner, shareholder, principal, 

owner, member, or audit manager 

of the Firm has become a defendant 

or respondent in a civil or 

alternative dispute resolution 

proceeding initiated by a 

governmental entity or in an 

administrative or disciplinary 

proceeding other than a Board 

disciplinary proceeding. (Complete 

Item 4.1 and Part VIII.) 

Item 2.9 The Firm has become aware 

that, in a matter arising out of his 

or her conduct in the course of 

providing professional services for a 

client, a partner, shareholder, 

principal, owner, member, or audit 

manager of the Firm who provided 

at least ten hours of audit services 

for any issuer during the Firm’s 

current fiscal year or its most 

recently completed fiscal year has 

become a defendant or respondent 

in a civil or alternative dispute 

resolution proceeding initiated by a 

governmental entity or in an 

administrative or disciplinary 

proceeding other than a Board 

disciplinary proceeding. (Complete 

Item 4.1 and Part VIII.) 

Item 2.10 The Firm has become aware 

that a proceeding meeting the 

criteria described in Items 2.4, 2.5, 

2.6, 2.7, 2.8, or 2.9 above has been 

concluded as to the Firm or a 

partner, shareholder, principal, 

owner, member, or audit manager 

of the Firm (whether by dismissal, 

acceptance of pleas, through 

consents or settlement agreements, 

the entry of a final judgment, or 

otherwise). (Complete Item 4.2 and 

Part VIII.) 

Item 2.11 The Firm has become aware 

that the Firm, or the parent or a 

subsidiary of the Firm, has become 

the subject of a petition filed in a 

bankruptcy court, or has otherwise 

become the subject of a proceeding 

in which a court or governmental 

agency (or, in a non-U.S. 

jurisdiction, a person or entity 

performing a comparable function) 

has assumed jurisdiction over 

substantially all of the assets or 

business of the Firm or its parent or 

a subsidiary. (Complete Item 4.3 

and Part VIII.) 

Certain Relationships 

Item 2.12 The Firm has taken on as an 

employee, partner, shareholder, 

principal, or member, or has 

otherwise become owned or partly 

owned by, a person who is 

currently the subject of (a) a Board 

disciplinary sanction suspending or 

barring the person from being an 

associated person of a registered 

public accounting firm or (b) a 

Commission order under Rule 

102(e) of the Commission’s Rules of 

Practice suspending or denying the 

privilege of appearing or practicing 

before the Commission. (Complete 

Item 5.1 and Part VIII.) 

Item 2.13 The Firm has become owned 

or partly owned by an entity that is 

currently the subject of (a) a Board 

disciplinary sanction suspending or 

revoking that entity’s registration or 

disapproving that entity’s 

application for registration, or (b) a 

Commission order under Rule 

102(e) of the Commission’s Rules of 

Practice suspending or denying the 

privilege of appearing or practicing 

before the Commission. (Complete 

Item 5.2 and Part VIII.) 

Item 2.14 The Firm has entered into a 

contractual or other arrangement to 

receive consulting or other 

professional services from a person 

or entity meeting any of the criteria 

described in Items 2.12 or 2.13 

above. (Complete Item 5.3 and Part 

VIII.) 

Licenses and Certifications 

Item 2.15 The Firm has become aware 

that its authorization to engage in 

the business of auditing or 

accounting in a particular 

jurisdiction has ceased to be 

effective or has become subject to 

conditions or contingencies other 

than conditions or contingencies 

imposed on all firms engaged in the 

business of auditing or accounting 

in the jurisdiction. (Complete Item 

6.1 and Part VIII.) 

Item 2.16 The Firm has obtained a 

license or certification authorizing 

the Firm to engage in the business 

of auditing or accounting and 

which has not been identified on 

any Form 1 or Form 3 previously 

filed by the Firm, or there has been 

a change in a license or certification 

number identified on a Form 1 or 

Form 3 previously filed by the 

Firm. (Complete Item 6.2 and Part 

VIII.) 

Changes in the Firm or the Firm’s Board 

Contact Person 

Item 2.17 The Firm has changed its 

legal name while otherwise 

remaining the same legal entity that 

it was before the name change. 

(Complete Item 7.1 and Part VIII.) 

Item 2.18 There has been a change in 

the business mailing address, 

business telephone number, 

business facsimile number, or 

business e-mail of the person most 

recently designated by the Firm (on 

Form 2, Form 3, or Form 4) as the 

Firm’s primary contact with the 

Board, or the Firm is designating a 

new person to serve as the primary 

contact. (Complete Item 7.2 and 

Part VIII.) 

Amendment 

Item 2.19 Amendments 

If this is an amendment to a report 

previously filed with the Board— 

a. Indicate, by checking the box 

corresponding to this item, that this is 

an amendment. 

b. Identify the specific Item numbers 

of this Form (other than this Item 2.19) 

as to which the Firm’s response has 

changed from that provided in the most 

recent Form 3 or amended Form 3 filed 

by the Firm with respect to the events 

reported on this Form. 

29100 Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 

Part III—Withdrawn Audit Reports 

Item 3.1 Withdrawn Audit Reports and 

Consents 

If the Firm has withdrawn an audit 

report on financial statements, or 

withdrawn its consent to the use of its 

name in a report, document, or written 

communication containing an issuer’s 

financial statements, and the issuer has 

failed to comply with a Commission 

requirement to make a report 

concerning the matter pursuant to Item 

4.02 of Commission Form 8–K, 

provide— 

a. The issuer’s name and CIK number, 

if any; 

b. The date(s) of the audit report(s) 

that the Firm has withdrawn, or to 

which the Firm’s withdrawal of consent 

relates; and 

c. A description of the reason(s) the 

Firm has withdrawn the audit report(s) 

or the consent. 

Note: The 30-day period in which the Firm 

must report the event does not begin to run 

unless and until the issuer fails to report on 

Form 8–K within the time required by the 

Commission’s rules. The Firm must then 

report the event on Form 3 within 30 days 

of the expiration of the required Form 8–K 

filing deadline, unless, within that 30-day 

period, the issuer reports on a late-filed Form 

8–K. 

Part IV—Certain Proceedings 

Item 4.1 Criminal, Governmental, 

Administrative, or Disciplinary 

Proceedings 

If the Firm has indicated in this Form 

3 that any of the events described in 

Items 2.4, 2.5, 2.6, 2.7, 2.8 or 2.9 has 

occurred, provide the following 

information with respect to each such 

event— 

a. The name, filing date, and case or 

docket number of the proceeding, and 

the nature of the proceeding, i.e., 

whether it is a criminal proceeding, a 

civil or alternative dispute resolution 

proceeding, or an administrative or 

disciplinary proceeding. 

b. The name of the court, tribunal, or 

body in or before which the proceeding 

was filed. 

c. An indication whether the Firm 

itself is a defendant or respondent in the 

proceeding and, if so, the statutes, rules, 

or legal duties that the firm is alleged to 

have violated, and a brief description of 

the firm’s alleged conduct in violation 

of those statutes, rules, or legal duties. 

d. The names of every defendant or 

respondent who is a partner, 

shareholder, principal, owner, member, 

or audit manager of the Firm, or who 

was such either at the time the Firm 

received notice of the proceeding or at 

the time of the alleged conduct on 

which any claim or charge is based, and 

who provided at least ten hours of audit 

services for any issuer during the Firm’s 

current fiscal year or its most recent 

fiscal year; and, as to each such 

defendant or respondent, the statutes, 

rules, or legal duties that he or she is 

alleged to have violated, and a brief 

description of his or her alleged conduct 

in violation of those statutes, rules, or 

legal duties. 

e. The name of any client that was the 

recipient of the professional services to 

which any claim or charge in the 

proceeding relates. 

Note: For the purpose of this Part, 

administrative or disciplinary proceedings 

include those of the Commission; any other 

federal, state, or non-U.S. agency, board, or 

administrative or licensing authority; and 

any professional association or body. 

Investigations that have not resulted in the 

commencement of a proceeding need not be 

included. 

Item 4.2 Concluded Criminal, 

Governmental, Administrative, or 

Disciplinary Proceedings 

If any proceeding meeting the criteria 

described in Items 2.4, 2.5, 2.6, 2.7, 2.8 

or 2.9, including any proceeding 

reported in Item 4.1, has been 

concluded as to the Firm or a partner, 

shareholder, principal, owner, member, 

or audit manager of the Firm (whether 

by dismissal, acceptance of pleas, 

through consents or settlement 

agreements, the entry of a final 

judgment, or otherwise), provide— 

a. The name, filing date, and case or 

docket number of the proceeding, and 

the nature of the proceeding, i.e., 

whether it is a criminal proceeding, a 

civil or alternative dispute resolution 

proceeding, or an administrative or 

disciplinary proceeding; 

b. The name of the court, tribunal, or 

body in or before which the proceeding 

was filed; and 

c. A brief description of the terms of 

the conclusion of the proceeding as to 

the Firm or partner, shareholder, 

principal, owner, member, or audit 

manager. 

Item 4.3 Bankruptcy or Receivership 

If the Firm, or the parent or a 

subsidiary thereof, has become the 

subject of a petition filed in a 

bankruptcy court, or has otherwise 

become the subject of a proceeding in 

which a court or governmental agency 

(or, in a non-U.S. jurisdiction, a person 

or entity performing a comparable 

function) has assumed jurisdiction over 

substantially all of the assets or business 

of the Firm or its parent or a subsidiary, 

provide— 

a. the name of the proceeding; 

b. the name of the court or 

governmental body; 

c. the date of the filing or of the 

assumption of jurisdiction; and 

d. the identity of the receiver, fiscal 

agent or similar officer, if applicable, 

and the date of his or her appointment. 

Part V—Certain Relationships 

Item 5.1 New Relationship With 

Person Subject to Bar or Suspension 

If the Firm has taken on as an 

employee, partner, shareholder, 

principal, or member, or has otherwise 

become owned or partly owned by, a 

person who is currently the subject of 

(a) a Board disciplinary sanction 

suspending or barring the person from 

being an associated person of a 

registered public accounting firm or (b) 

a Commission order under Rule 102(e) 

of the Commission’s Rules of Practice 

suspending or denying the privilege of 

appearing or practicing before the 

Commission, provide— 

a. the name of the person; 

b. the nature of the person’s 

relationship with the Firm; and 

c. the date on which the person’s 

relationship with the Firm began. 

Item 5.2 New Ownership Interest by 

Firm Subject to Bar or Suspension 

If the Firm has become owned or 

partly owned by an entity that is 

currently the subject of (a) a Board 

disciplinary sanction suspending or 

revoking that entity’s registration or 

disapproving that entity’s application 

for registration, or (b) a Commission 

order under Rule 102(e) of the 

Commission’s Rules of Practice 

suspending or denying the privilege of 

appearing or practicing before the 

Commission, provide— 

a. the name of the entity that has 

obtained an ownership interest in the 

Firm; 

b. the nature and extent of the 

ownership interest; and 

c. the date on which the ownership 

interest was obtained. 

Item 5.3 Certain Arrangements To 

Receive Consulting or Other 

Professional Services 

If the Firm has entered into a 

contractual or other arrangement to 

receive consulting or other professional 

services from a person or entity meeting 

any of the criteria described in Items 

2.12 or 2.13 above, provide— 

a. the name of the person or entity; 

b. the date that the Firm entered into 

the contract or other arrangement; and 

c. a description of the services to be 

provided to the Firm by the person or 

entity. 

Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 29101 

Part VI—Licenses and Certifications 

Item 6.1 Loss of, or Limitations 

Imposed on, Authorization To Engage in 

the Business of Auditing or Accounting 

If the Firm’s authorization to engage 

in the business of auditing or 

accounting in a particular jurisdiction 

has ceased to be effective or has become 

subject to conditions or contingencies 

other than conditions or contingencies 

imposed on all firms engaged in the 

business of auditing or accounting in 

the jurisdiction, provide— 

a. the name of the state, agency, board 

or other authority that had issued the 

license or certification related to such 

authorization; 

b. the number of the license or 

certification; 

c. the date that the authorization 

ceased to be effective or became subject 

to conditions or contingencies, and 

d. a brief description of the reason(s) 

for such action, including a description 

of the conditions or contingencies, if 

any. 

Item 6.2 New License or Certification 

If the Firm has obtained any license 

or certification authorizing the Firm to 

engage in the business of auditing or 

accounting, and which has not been 

identified on any Form 1 or Form 3 

previously filed by the Firm, or there 

has been a change in any license or 

certification number identified on a 

Form 1 or Form 3 previously filed by 

the Firm, provide — 

a. the name of the issuing state, 

agency, board or other authority; 

b. the number of the license or 

certification; 

c. the date the license or certification 

took effect; and 

d. if the license or certification 

replaces another license or certification 

issued by the same authority, the 

number of the replaced license or 

certification. 

Note: If the Firm is filing a Form 4 to report 

a change in its form of organization, change 

in jurisdiction, or a business combination, 

the Firm should report on Form 4, rather 

than Form 3, any related license change that 

takes effect before the submission of the 

Form 4. 

Part VII—Changes in the Firm or the 

Firm’s Board Contact Person 

Item 7.1 Change in Name of Firm 

If the Firm is reporting a change in its 

legal name— 

a. State the new legal name of the 

Firm; 

b. State the legal name of the Firm 

immediately preceding the new legal 

name; 

c. State the effective date of the name 

change; 

d. Provide a brief description of the 

reason(s) for the change; and 

e. Affirm, by checking the box 

corresponding to this Item, that, other 

than the name change, the Firm is the 

same legal entity that it was before the 

name change. 

Note: If, other than the name change, the 

Firm is not the same legal entity that it was 

before the name change, whether because of 

a change in the Firm’s legal form of 

organization or because of other transactions, 

the registration status of the predecessor firm 

does not automatically attach to the Firm, 

and the Firm cannot report the event as a 

name change. If the Firm cannot make the 

affirmation required by Item 7.1.e, the Firm 

cannot execute the certification in Part VIII 

as to Item 7.1, and this Form cannot be 

deemed filed under Rule 2206. 

In that event, the Firm should consider 

whether, pursuant to the provisions of Rule 

2108, the Firm can make the representations 

required in a Form 4 filing to enable the 

predecessor firm’s registration to attach to the 

Firm. If the Firm cannot or does not file with 

the Board a Form 4 making all necessary 

representations, the predecessor firm’s 

registration does not attach to the Firm. In 

those circumstances, the Firm may not 

lawfully prepare or issue an audit report 

without first filing an application for 

registration on Form 1 and having that 

application approved by the Board. 

Note: If the Firm is filing a Form 4 to report 

a change in its form of organization, change 

in jurisdiction, or a business combination, 

the Firm should report any related name 

change on Form 4 and not on Form 3. 

Item 7.2 Change in Contact 

Information 

If there has been a change in the 

business mailing address, business 

telephone number, business facsimile 

number, or business e-mail address of 

the person most recently designated by 

the Firm (on Form 2, Form 3, or Form 

4) as the Firm’s primary contact with 

the Board, or if the Firm is designating 

a new person to serve as the primary 

contact, provide the name and current 

business mailing address, business 

telephone number, business facsimile 

number, and business e-mail of the 

partner or authorized officer of the Firm 

who will serve as the Firm’s primary 

contact with the Board. 

Part VIII—Certification of the Firm 

Item 8.1 Signature of Partner or 

Authorized Officer 

This Form must be signed on behalf 

of the Firm by an authorized partner or 

officer of the Firm including, in 

accordance with Rule 2204, both a 

signature that appears in typed form 

within the electronic submission and a 

corresponding manual signature 

retained by the Firm. The signer must 

certify that— 

a. the signer is authorized to sign this 

Form on behalf of the Firm; 

b. the signer has reviewed this Form; 

c. based on the signer’s knowledge, 

this Form does not contain any untrue 

statement of a material fact or omit to 

state a material fact necessary to make 

the statements made, in light of the 

circumstances under which such 

statements were made, not misleading; 

and 

d. either— 

1. based on the signer’s knowledge, 

the Firm has not failed to include in this 

Form any information or affirmation 

that is required by the instructions to 

this Form, with respect to the event or 

events being reported on this Form, or 

2. based on the signer’s knowledge— 

(A) the Firm is a foreign registered 

public accounting firm and has not 

failed to include in this Form any 

information or affirmation that is 

required by the instructions to this 

Form, with respect to the event or 

events being reported on this Form, 

except for information or affirmations 

that the Firm asserts it cannot provide 

to the Board on this Form 3 without 

violating non-U.S. law; 

(B) with respect to any such withheld 

information or affirmation, the Firm has 

made the efforts required by PCAOB 

Rule 2207(b) and has in its possession 

the materials required by PCAOB Rule 

2207(c); and 

(C) the Firm has indicated, in 

accordance with the instructions to this 

Form, each Item of this Form with 

respect to which the Firm has withheld 

any required information. 

The signature must be accompanied 

by the signer’s title, the capacity in 

which the signer signed the Form, the 

date of signature, and the signer’s 

business mailing address, business 

telephone number, business facsimile 

number, and business e-mail address. 

Part IX—Exhibits 

To the extent applicable under the 

foregoing instructions, each special 

report must be accompanied by the 

following exhibits: 

Exhibit 99.1 Request for Confidential 

Treatment 

Exhibit 99.3 Materials Required by 

Rule 2207(c)(2)–(4)—Submit Only 

as an Exhibit to an Amended Form 

3 in Response to a Request Made 

Pursuant to Rule 2207(d) 

In addition to the above rules and 

form instructions, the Board has 

adopted related amendments to PCAOB 

29102 Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 

Rules 1001, 2107, 2300, 4000, and 4003. 

The amendments are shown below, with 

new language italicized, deleted 

language in brackets, and unchanged 

language indicated by a series of three 

asterisks. 

Section 1. General Provisions 

Rule 1001. Definitions of Terms 

Employed in Rules 

When used in the Rules, unless the 

context otherwise requires: 

* * * 

(a)(vii) Audit Services 

The term ‘‘audit services’’ means [— 

(1) subject to paragraph (a)(vii)(2) of 

this Rule, professional services rendered 

for the audit of an issuer’s annual 

financial statements, and (if applicable) 

for the reviews of an issuer’s financial 

statements included in the issuer’s 

quarterly reports. 

(2) effective after December 15, 2003,] 

professional services rendered for the 

audit of an issuer’s annual financial 

statements, and (if applicable) for the 

reviews of an issuer’s financial 

statements included in the issuer’s 

quarterly reports or services that are 

normally provided by the accountant in 

connection with statutory and 

regulatory filings or engagements for 

those fiscal years. 

* * * 

(n)(ii) Non-Audit Services 

The term ‘‘non-audit services’’ means 

[— 

(1) subject to paragraph (n)(ii)(2) of 

this Rule, services related to financial 

information systems design and 

implementation as defined in Rule 2– 

01(c)(4)(ii) of Regulation S–X, 17 C.F.R. 

2–01(c)(4)(ii), and all other services, 

other than audit services or other 

accounting services. 

(2) effective after December 15, 2003,] 

all [other] services other than audit 

services, other accounting services, and 

tax services. 

* * * 

(o)(i) Other Accounting Services 

The term ‘‘other accounting services’’ 

means [— 

(1) subject to paragraph (o)(i)(2) of this 

Rule, services that are normally 

provided by the public accounting firm 

that audits the issuer’s financial 

statements in connection with statutory 

and regulatory filings or engagements 

and assurance and related services that 

are reasonably related to the 

performance of the audit or review of 

the issuer’s financial statements, other 

than audit services. 

(2) effective after December 15, 2003,] 

assurance and related services that are 

reasonably related to the performance of 

the audit or review of the issuer’s 

financial statements, other than audit 

services. 

* * * 

Section 2. Registration And Reporting 

Part 1—Registration of Public 

Accounting Firms 

* * * 

Rule 2107. Withdrawal from 

Registration 

* * * 

(c) Effect of Filing 

[(1)] Beginning on the date of Board 

receipt of a completed Form 1–WD, [the 

firm that filed the Form 1–WD shall not 

engage in the preparation or issuance of, 

or play a substantial role in the 

preparation or furnishing of, an audit 

report, other than to issue a consent to 

the use of an audit report for a prior 

period, unless it first withdraws its 

Form 1–WD. 

(2) Beginning on the fifth day 

following the Board’s receipt of a 

completed Form 1–WD,] and continuing 

for as long as the Form 1–WD is 

pending— 

[(i) the firm may satisfy the annual 

reporting requirement by submitting a 

report stating that a completed Form 1– 

WD has been filed and is pending;] 

(1) the firm shall not engage in the 

preparation or issuance of, or play a 

substantial role in the preparation or 

furnishing of, an audit report, other 

than to issue a consent to the use of an 

audit report for a prior period; 

(2[i]) the firm’s obligation to file 

annual reports on Form 2, and special 

reports on Form 3 shall be suspended; 

[(ii) any annual fee assessed shall be 

zero;] 

(3[iii]) the Board shall have the 

discretion to forego any regular 

inspection that would otherwise 

commence pursuant to Rule 4003(a) or 

Rule 4003(b); and 

(4[iv]) the firm’s registration status 

shall be designated as ‘‘registered— 

withdrawal request pending,’’ and the 

firm shall not publicly represent its 

registration status without specifying it 

as ‘‘registered—withdrawal request 

pending.’’ 

* * * 

(f) Withdrawal of Form 1–WD 

A registered public accounting firm 

that has submitted a Form 1–WD may 

withdraw the form at any time by filing 

with the Board a written notice of intent 

to withdraw the Form 1–WD along with 

any annual fee [and], annual report, and 

special report that the firm would have 

been required to submit during the 

period that the Form 1–WD was 

pending if not for the provisions of 

paragraph (c)(2). 

Part 3—Public Availability of 

Applications and Reports 

Rule 2300. Public Availability of 

Information Submitted to the Board; 

Confidential Treatment Requests. 

(a) Except as provided in paragraph 

(b) below— 

(1) an application for registration will 

be publicly available as soon as 

practicable after the Board approves or 

disapproves such application; and 

(2) all other forms filed pursuant to 

Part 1 or Part 2 of this Section of the 

Rules of the Board, and any 

amendments thereto, will be publicly 

available as soon as practicable after 

filing, except to the extent otherwise 

specified in the Board’s rules or the 

instructions to the form. 

(b) Confidential Treatment Requests. 

(1) A public accounting firm may 

request confidential treatment of any 

information submitted to the Board in 

connection with its application for 

registration on Form 1, and may request 

confidential treatment of information on 

other forms filed pursuant to Part 1 or 

Part 2 of this Section of the Rules of the 

Board to the extent specified in the 

instructions to the form, provided that 

the information as to which confidential 

treatment is requested— 

([1]i) has not otherwise been publicly 

disclosed, and 

([2]ii) either (A[i]) contains 

information reasonably identified by the 

public accounting firm as proprietary 

information, or (B[ii]) is protected from 

public disclosure by applicable laws 

related to the confidentiality of 

proprietary, personal, or other 

information. 

(2) Failure to provide an exhibit that 

complies with the requirements of 

paragraph (c)(2) of this Rule constitutes 

sufficient grounds for denial of any 

request for confidential treatment. 

(c) Application Procedures. 

To request confidential treatment of 

information for which such requests are 

permitted by paragraph (b)(1) of this 

Rule[ submitted to the Board in 

connection with an application for 

registration], the [applicant] requestor 

must— 

(1) identify, in accordance with the 

instructions [on Form 1] to the form, the 

information that it desires to keep 

confidential; and 

(2) include as an exhibit to [Form 1 a 

detailed explanation as to why, based 

on the facts and circumstances of the 

particular case, the information meets 

the requirements of paragraph (b) of this 

Rule.] the form a representation that, to 

the requestor’s knowledge, the 

information for which confidential 

treatment is requested has not otherwise 

been publicly disclosed and— 

Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 29103 

(i) a detailed explanation of the 

grounds on which the information is 

considered proprietary; or 

(ii) a detailed explanation of the basis 

for asserting that the information is 

protected by law from public disclosure 

and a copy of the specific provision of 

law that the requestor claims protects 

the information from public disclosure. 

* * * * * 

(f) Unless the [applicant] requestor 

requests otherwise, the exhibit 

containing an explanation supporting a 

confidential treatment request will be 

afforded confidential treatment without 

the need for a request for confidential 

treatment. 

(g) Information as to which the Board 

grants confidential treatment under this 

[r]Rule will not be made available to the 

public by the Board. The granting of 

confidential treatment will not, 

however, limit the ability of the Board 

(1) to provide the information as to 

which confidential treatment was 

granted to the Commission, or (2) to 

comply with any subpoena validly 

issued by a court or other body of 

competent jurisdiction. In the event the 

Board receives such a subpoena, the 

Board will notify the [applicant] public 

accounting firm of such subpoena, to 

the extent permitted by law, to allow the 

[applicant] public accounting firm the 

opportunity to object to such subpoena. 

* * * * * 

Section 4. Inspections 

Rule 4000. General 

(a) Every registered public accounting 

firm shall be subject to all such regular 

and special inspections as the Board 

may from time to time conduct in order 

to assess the degree of compliance of 

each registered public accounting firm 

and associated persons of that firm with 

the Act, the Board’s rules, the rules of 

the Commission, and professional 

standards, in connection with its 

performance of audits, issuance of audit 

reports, and related matters involving 

issuers. 

(b) In furtherance of the Board’s 

inspection process, the Board may at 

any time request that a registered public 

accounting firm provide to the Board 

additional information or documents 

relating to information provided by the 

firm in any report filed pursuant to 

Section 2 of these Rules, or relating to 

information that has otherwise come to 

the Board’s attention. Any request for 

information or documents made 

pursuant to this Rule, and any 

information or documents provided in 

response to such a request, shall be 

considered to be in connection with the 

next regular or special inspection of the 

registered public accounting firm. 

(c) Inspection steps and procedures 

shall be performed by the staff of the 

Division of Registration and Inspections, 

and by such other persons as the Board 

may authorize to participate in 

particular inspections or categories of 

inspections. 

* * * * * 

Rule 4003. Frequency of Inspections 

* * * * * 

(c) With respect to a registered public 

accounting firm that has filed a 

completed Form 1–WD under Rule 

2107, the Board shall have the 

discretion to forgo any regular 

inspection that would otherwise 

commence during the period beginning 

on the [fifth day following the filing of 

the] date of Board receipt of a 

completed Form 1–WD and continuing 

until the firm’s registration is deemed 

withdrawn or the firm withdraws the 

Form 1–WD. 

* * * * * 

II. Board’s Statement of the Purpose of, 

and Statutory Basis for, the Proposed 

Rule 

In its filing with the Commission, the 

Board included statements concerning 

the purpose of, and basis for, the 

proposed rule. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Board has prepared summaries, set forth 

in sections A, B, and C below, of the 

most significant aspects of such 

statements. 

A. Board’s Statement of the Purpose of, 

and Statutory Basis for, the Proposed 

Rules 

(a) Purpose 

Section 102(d) of the Act provides 

that each registered public accounting 

firm shall provide an annual report to 

the Board, and may be required to report 

more frequently, as necessary to update 

information in its application for 

registration and to provide such 

additional information as the Board or 

the Commission may specify. The 

purpose of the proposed new rules and 

forms is to establish the foundation of 

a reporting and disclosure system for 

registered public accounting firms 

pursuant to Section 102(d) of the Act, 

and to specify the details of certain 

reporting obligations and provide forms 

for such reporting. To the extent that the 

Board identifies additional reporting 

requirements that are necessary or 

appropriate in the public interest or for 

the protection of investors, the Board 

may propose and adopt them in the 

future. 

The proposed reporting requirements 

serve three fundamental purposes. First, 

firms will report information to keep the 

Board’s records current about such basic 

matters as the firm’s name, location, 

contact information, and licenses. 

Second, firms will report information 

reflecting the extent and nature of the 

firm’s audit practice related to issuers in 

order to facilitate analysis and planning 

related to the Board’s inspection 

responsibilities and to inform other 

Board functions, as well as for the value 

the information may have to the public. 

Third, firms will report circumstances 

or events that could merit follow-up 

through the Board’s inspection process 

or its enforcement process, and that also 

may otherwise warrant being brought to 

the public’s attention (such as a firm’s 

withdrawal of an audit report in 

circumstances where the information is 

not otherwise publicly available). 

The reporting framework includes 

two types of reporting obligations. First, 

it requires each registered firm to 

provide basic information once a year 

about the firm and the firm’s issuerrelated practice over the most recent 12- 

month period. The firm must do so by 

filing an annual report on Form 2. 

Second, upon the occurrence of 

specified events, a firm must report 

certain information by filing a special 

report on Form 3. 

Proposed Rule 2201 sets June 30 as 

the deadline for the annual filing of 

Form 2. The reporting period covered by 

the report would be April 1 to March 31, 

leaving each firm with three months to 

prepare and file a Form 2 reflecting 

information from that 12-month period. 

Any firm that was registered as of March 

31 of a particular year would be 

required to file Form 2 by June 30 of 

that year, but any firm that became 

registered in the period between and 

including April 1 and June 30 would 

not be required to file a Form 2 until 

June 30 of the following year. 

Under the proposed rules, the 

occurrence of specified events triggers 

an obligation to file a special report on 

Form 3. The proposed rules provide that 

special reports must be filed within 30 

days of the triggering event. 

The Board expects annual and special 

reports to be complete and accurate, and 

inaccuracies or omissions could form 

the basis for disciplinary sanctions for 

failing to comply with the reporting 

requirements reflected in Rules 2200 

and 2203 and the instructions to Forms 

2 and 3. Proposed Rule 2205 provides 

for the filing of amendments to 

previously filed annual or special 

reports if the originally filed report 

29104 Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 

1The proposed amendments to Rule 2300(b)–(c), 

concerning the required support, would also apply 

prospectively to confidential treatment requests on 

applications for registration on Form 1. 

2 In connection with that change to Rule 2107, the 

amendment also eliminates the five-day delay 

before certain other consequences take effect. 

Among other things, the Board is amending Rule 

2107(c)(2)(iii) so that the Board would, immediately 

upon receipt of the completed Form 1–WD, have 

the discretion to forego any regular inspection of 

the firm that otherwise would commence. This 

change necessitates a conforming change to Rule 

4003(c), and the Board is making that conforming 

change as well. 

included information that was incorrect 

at the time of the filing, or if the 

originally filed form omitted any 

information or affirmation that was, at 

the time of such filing, required to be 

included in that report. 

Annual and special reports will be 

made public on the Board’s Web site 

promptly upon being filed by a firm, 

subject to exceptions for information for 

which a firm requests confidential 

treatment. The Board intends that as 

much reported information as possible 

be publicly available as soon as possible 

after filing. The proposed forms identify 

certain categories of information for 

which a firm may request confidential 

treatment. The proposed rules include 

new requirements concerning the 

support that a firm must supply for a 

confidential treatment request.1 The 

proposed amendments require that a 

firm support a request with both a 

representation that the information has 

not otherwise been publicly disclosed 

and either (1) a detailed explanation of 

the grounds on which the information is 

considered proprietary, or (2) a detailed 

explanation of the basis for asserting 

that the information is protected by law 

from public disclosure and a copy of the 

specific provision of law. The proposed 

amendments also provide that the firm’s 

failure to supply the required support 

constitutes sufficient grounds for denial 

of the request. 

Under proposed Rule 2207, a nonU.S. firm may withhold required 

information from Form 2 or Form 3 if 

the firm cannot provide the information 

without violating non-U.S. law. If the 

firm withholds information on that 

ground, it must have certain supporting 

materials, including (1) a copy of the 

relevant provisions of non-U.S. law, (2) 

a legal opinion concluding that the firm 

would violate non-U.S. law by 

submitting the information to the Board, 

and (3) a written explanation of the 

firm’s efforts to seek consents or waivers 

that would be sufficient to overcome the 

conflict with respect to the information. 

The firm must certify on the form that 

it has the supporting materials in its 

possession. The rule reserves to the 

Board, and to the Director of the 

Division of Registration and Inspections, 

the discretion to require that a firm 

submit any of those supporting 

materials in a particular case. The rule 

also reserves to the Board the discretion 

to require that the firm provide any of 

the withheld information in a particular 

case. 

The proposed rules include an 

amendment to the Board’s inspection 

rules that makes clear that the Board 

may require a firm to provide additional 

information. Specifically, existing Rule 

4000 provides that registered firms shall 

be subject to such regular and special 

inspections as the Board chooses to 

conduct. The proposed amendment 

adds a paragraph providing that the 

Board, in the exercise of its inspection 

authority, may at any time request that 

a registered firm provide additional 

information or documents relating to 

information provided on Form 2 or 

Form 3, or relating to information that 

has otherwise come to the Board’s 

attention. The amendment provides that 

the request and response are considered 

to be in connection with the firm’s next 

regular or special inspection. 

Accordingly, the cooperation 

requirements of Rule 4006 apply, and 

the request and response are subject to 

the confidentiality restrictions of 

Section 105(b)(5) of the Act. 

Existing Rule 2107 governs the 

process by which a firm may seek to 

withdraw from registration with the 

Board. Under Rule 2107, a firm cannot 

withdraw at will, but must request the 

Board’s permission to withdraw, and 

the Board may withhold that permission 

under certain conditions. The proposed 

rules include an amendment to Rule 

2107 to change the way it addresses the 

reporting obligations of a firm that has 

filed Form 1–WD seeking leave to 

withdraw. Existing Rule 2107(c)(2)(i) 

provides that, beginning on the fifth day 

after the Board receives a completed 

Form 1–WD, the firm can satisfy any 

annual reporting requirement by 

submitting a report stating that a 

completed Form 1–WD has been filed 

and is pending. Under the proposed 

amendment, the firm’s reporting 

obligation, including both annual and 

special reporting, would simply be 

suspended while Form 1–WD was 

pending. If a firm withdraws its Form 1– 

WD and continues as a registered firm, 

however, Rule 2107 would require the 

filing of any annual or special reports, 

and the payment of any annual fee, that 

otherwise would have been required 

while the Form 1–WD was pending. The 

Board is also eliminating from Rule 

2107 the five-day delay between receipt 

of a completed Form 1–WD and the 

effect of that filing on a firm’s reporting 

obligation. Suspension of that obligation 

would occur immediately upon the 

Board’s receipt of the completed Form 

1–WD.2

The Board also proposed to delete 

from definitions in PCAOB Rule 1001 

certain provisions that ceased to apply 

after December 15, 2003. Specifically, 

the Board proposes to amend Rules 

1001(a)(vii) (definition of ‘‘audit 

services’’), 1001(o)(i) (definition of 

‘‘other accounting services’’), and 

1001(n)(ii) (definition of ‘‘tax services’’) 

by deleting the paragraph denominated 

‘‘(1)’’ from each rule. 

The proposed rules would take effect 

60 days after Securities and Exchange 

Commission approval. 

(b) Statutory Basis 

The statutory basis for the proposed 

rule is Title I of the Act. 

B. Board’s Statement on Burden on 

Competition 

The Board does not believe that the 

proposed rules will result in any burden 

on competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Act. The proposed rules 

impose no burden beyond burdens 

clearly imposed and contemplated by 

the Act. 

C. Board’s Statement on Comments on 

the Proposed Rules Received From 

Members, Participants or Others 

The Board released the proposed rules 

and form instructions for public 

comment in Release No. 2006–004 (May 

23, 2006). A copy of Release No. 2006– 

004 and the comment letters received in 

response to the PCAOB’s request for 

comment are available on the PCAOB’s 

Web site at http://www.pcaobus.org. 

The Board received twelve written 

comment letters. The Board has clarified 

and modified certain aspects of the 

proposed rules and form instructions in 

response to the comments it received, as 

discussed below. 

Commenters voiced concern about 

burdens associated with the proposed 

requirement to report the percentage of 

total fees billed to all clients that is 

attributable to fees billed in each of four 

categories of services provided to issuer 

audit clients. Commenters indicated 

that firms, particularly large firms, may 

not be able to comply with the proposed 

requirement without making costly 

changes to their internal systems. The 

Board has weighed these concerns 

carefully, bearing in mind that the 

purposes for which the information is 

Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 29105 

3Compare the descriptions of services in Item 

9(e) of Commission Schedule 14A (17 CFR 240.14a– 

101) under the headings ‘‘Audit Fees,’’ ‘‘AuditRelated Fees,’’ ‘‘Tax Fees,’’ and ‘‘All Other Fees’’ 

with, respectively, the Board’s definitions of ‘‘Audit 

Services’’ (Rule 1001(a)(vii)), ‘‘Other Accounting 

Services’’ (Rule 1001(o)(i)), ‘‘Tax Services’’ (Rule 

1001(t)(i)), and ‘‘Non-Audit Services’’ (Rule 

1001(n)(ii)). The note to Item 3.2 on Form 2 has 

been expanded to highlight this point. 

sought do not depend upon a high level 

of precision in the data. The Board is 

adopting a modified version of the 

proposed requirement, incorporating 

some elements of alternatives suggested 

by commenters. 

Form 2 will allow a firm to select 

from two methods of calculating the 

percentages to report. Firms that are 

reasonably able to report the requested 

percentages based on data precisely 

coinciding with the annual reporting 

period (i.e., the data specified by the 

proposed requirement) may do so. As an 

alternative, a firm may, for each 

category of services, report the 

percentage derived by (1) using as a 

denominator the total fees billed to all 

clients in the firm’s fiscal year that 

ended during the annual reporting 

period and (2) using as a numerator the 

total issuer audit client fees as 

determined by reference to the fee 

amounts disclosed to the Commission 

by those clients for each client’s fiscal 

year that ended during the reporting 

period (or, for clients who have not 

made the required Commission filings, 

the fee amounts required to be 

disclosed). Under either approach, a 

firm may use any reasonable method to 

estimate the components and may 

round the reported percentages to the 

nearest five percent. Firms that use 

estimated data in their calculations 

should briefly describe their 

methodology in an exhibit to Form 2. 

Some commenters also expressed 

concern about what they saw as a 

disconnect between the four categories 

of services used in the proposed form 

and the four categories of fees that the 

Commission requires issuers to report in 

proxy filings. The Board reiterates that 

its definitions of these four categories of 

services correspond to the 

Commission’s descriptions of services 

for which an issuer must disclose the 

fees paid to its auditor.3 The Board is 

not adopting commenters’ suggestions 

to make the Board’s labels conform to 

the Commission’s labels (i.e., to say 

‘‘audit-related services’’ instead of 

‘‘other accounting services’’ and to say 

‘‘all other services’’ instead of ‘‘nonaudit services’’) because the labels that 

the Board uses come from Section 

102(b)(2)(B) of the Act and have been 

used in all applications for registration 

on Form 1. Commenters also noticed a 

disconnect between Item 3.2’s focus on 

fees billed and the reference to 

‘‘revenues’’ in Item 3.2’s caption. The 

Board has changed the caption to refer 

to fees billed instead of revenues. 

Item 4.1 of Form 2 requires 

information relating to a firm’s issuance 

of audit reports during the reporting 

period. As it was proposed, Item 4.1 

would have required, among other 

things, the total number of firm 

personnel who exercised authority to 

sign the firm’s name to an audit report 

during the reporting period. 

Commenters suggested various 

alternatives to requiring that precise 

number. Bearing in mind that, here too, 

the purposes for which the information 

is sought—principally inspection 

scoping and planning—do not depend 

upon precise information, the Board has 

adopted a slightly modified version of 

an approach suggested by a commenter. 

As adopted, Item 4.1.b requires a firm to 

indicate from among the following 

ranges how many individuals exercised 

the authority to sign the firm’s name to 

an audit report in the reporting period: 

1–9, 10–25, 26–50, 51–100, 101–200, or 

more than 200. If the firm indicates that 

the range is 1–9, the firm must also 

provide the exact number. 

One commenter sought clarification 

on whether the audit report date being 

requested referred to the date of the 

auditor’s report, the report release date 

pursuant to PCAOB Auditing Standard 

No. 3, Audit Documentation, or the date 

that the issuer filed the report with the 

Commission. A note to Item 4.1 now 

clarifies that the date called for by Item 

4.1.a.3 is the date of the audit report, as 

described in AU 530, Dating of the 

Independent Auditor’s Report. A note 

has also been added to clarify that it is 

not necessary to provide the date of any 

consent to an issuer’s use of an audit 

report previously issued for that issuer, 

except that, if such consents constitute 

the only instances of the firm issuing 

audit reports for a particular issuer 

during the reporting period, the firm 

should include that issuer in Item 4.1 

and include the dates of such consents 

in Item 4.1.a.3. 

If, during the reporting period, a firm 

plays a substantial role in the 

preparation or furnishing of an audit 

report that was issued in the reporting 

period, but the firm did not issue audit 

reports required to be reported under 

Item 4.1, the firm must report certain 

information under Item 4.2. As 

proposed, Item 4.2.a.4 would have 

required the firm to report the date of 

each such audit report. One commenter 

expressed concern that a firm might not 

have access to the date of an audit 

report issued by another firm. The 

Board has revised Item 4.2.a.4 to 

require, instead, the end date of the 

fiscal period covered by the financial 

statements that were the subject of the 

audit report. 

Item 5.2.a.3, as proposed, would have 

required the firm to state whether it has 

any ‘‘affiliation, whether by contract or 

otherwise, with another entity through 

or from which the firm commonly 

employs or leases personnel to perform 

audit services, or with which the firm 

otherwise engages in an alternative 

practice structure.’’ Commenters asked 

for clarification of ‘‘commonly’’ and also 

suggested that the term ‘‘affiliation’’ 

could cause confusion since the item 

does not appear intended to be limited 

to relationships commonly viewed as 

‘‘affiliate’’ relationships. The final 

version of Item 5.2.a.3 avoids the use of 

‘‘affiliation’’ and ‘‘commonly’’ and 

requires the firm to state whether it has 

any ‘‘arrangement, whether by contract 

or otherwise, with another entity 

through or from which the firm employs 

or leases personnel to perform audit 

services.’’ One commenter also asked 

the Board to clarify that Item 5.2.a.3 

does not encompass a firm’s hiring of, 

or contracting for, support personnel. 

Item 5.2.a.3, by its terms, encompasses 

only arrangements through which the 

firm employs or leases ‘‘personnel to 

perform audit services.’’ 

Regarding Part VI, commenters 

expressed concern about Item 6.1.d’s 

requirement to provide information 

about the number of firm personnel, 

segregated by functional level, who 

provided audit services during the 

reporting period. Commenters stated 

that some firms cannot readily track 

with precision the number of such 

individuals. Commenters constructively 

suggested various alternative ways to 

collect a rough surrogate for that 

number. The Board has concluded, 

however, not to adopt any version of 

Item 6.1.d at this time. 

Item 6.1.b requires the firm to report 

the total number, as of the end of the 

reporting period, of the firm’s certified 

public accountants, and requires the 

firm to include in that number any firm 

accountants with ‘‘comparable licenses’’ 

from non-U.S. jurisdictions. One 

commenter asked for clarification of the 

‘‘comparable license’’ concept. The 

‘‘comparable license’’ concept is not 

new, but is employed in the Form 1 

application for registration. Even so, the 

commenter suggested clarifying that the 

requirement refers to accountants that 

are (1) licensed by the jurisdiction in 

which they render services and (2) by 

virtue of such license, are certified to 

perform the functions of a public 

accountant. The Board confirms this as 

29106 Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 

the appropriate understanding of the 

requirement. 

In Part VII of Form 2, the firm must 

report information if it stands in certain 

relationships to individuals who, or 

entities that, were the subject of a Board 

order imposing a disciplinary sanction 

or a Commission Rule 102(e) order 

entered within the five years preceding 

the end of the reporting period. 

As proposed, the Part VII items would 

have required a firm to report new 

relationships commenced during the 

reporting period, and the proposal 

would have required every firm’s first 

Form 2 filing to report this information 

not only for the reporting period but for 

the entire period back to the cut-off date 

that the firm used for information it 

supplied in its Form 1 application. For 

hundreds of firms’ first Form 2 filings, 

that period would be more than five 

years. 

In response to comments about that 

burden, the Board has restructured the 

Part VII items relating to firm personnel 

or owners to capture only relationships 

that (1) exist as of the end of the 

reporting period, (2) are with 

individuals or entities whose relevant 

disciplinary sanction or Rule 102(e) 

order was entered within the five years 

preceding the end of the reporting 

period, and (3) have not previously been 

reported by the firm on Forms 1, 2, or 

3. The Board has also restructured the 

Part VII item relating to receipt of 

consulting or professional services to 

capture only relationships that involve 

services received, or contracted for, in 

the reporting period. With these 

changes, a firm’s first Form 2 will still 

effectively serve to fill any gap, but the 

burden will only extend to currently 

relevant information. Subsequent Form 

2 filings need not report the same 

information again just because the 

relationship continues to exist at the 

end of the reporting period. 

In response to commenters’ concerns 

and suggestions, the Board has also 

limited the scope of relevant firm 

personnel to those who provided at least 

ten hours of audit services for any issuer 

during the reporting period. It is 

important to note, however, how this 

change intersects with the structural 

change described above. Just because an 

individual does not meet the ten-hour 

threshold during the reporting period in 

which the relationship begins does not 

mean that the firm need never report the 

relationship. If there is a later reporting 

period in which that person meets the 

ten-hour threshold, and that reporting 

period end is still within five years of 

the entry of the disciplinary sanction or 

Commission order, the firm must report 

that relationship in its annual report for 

that period. The relationship need only 

be reported one time, however, and 

need not be reported again for future 

reporting periods in which the criteria 

are met. 

Also in response to comments, the 

Board has added a scope limitation to 

Part VII’s approach concerning the 

firm’s receipt of consulting or other 

professional services. The Board has 

narrowed the reporting trigger to 

encompass only arrangements for 

services related to the firm’s audit 

practice or related to services the firm 

provides to issuer audit clients. The 

reporting obligation is triggered for any 

reporting period that ends less than five 

years after entry of the disciplinary 

sanction or Commission order and in 

which the firm has received or arranged 

to receive such services. 

Finally, the Board is eliminating one 

category of reportable relationships that 

was included in the proposal. The 

Board proposed that firms report 

information if they entered into a 

relationship with any individual who, 

while not having been sanctioned 

personally, was a principal of a firm at 

the time of conduct for which the firm 

was later subjected to specified 

sanctions. After carefully considering 

comments, however, the Board is 

persuaded that any occasional value this 

information might have is outweighed 

by the fact that treating this information 

as a risk indicator about either the firm 

or the individual has the potential to 

diminish the professional opportunities 

of (1) individuals who had no 

connection to the misconduct at all, and 

(2) individuals who had a connection to 

alleged misconduct, but who never had 

an opportunity to defend against 

charges because a regulator was satisfied 

to conclude the matter through a 

settlement with the firm. In addition, 

the Board is sensitive to the unusual 

burden that would be placed on firms 

not only to ascertain this information at 

the time they commence the 

relationship, but also to continually 

monitor for it, since the relevant 

sanction might not be entered until 

years after the conduct. 

In Part VIII of Form 2, the firm must 

report information if it has acquired 

another public accounting firm or taken 

on 75 percent or more of another 

accounting firm’s principals. 

Commenters suggested the need for 

some clarification, and the Board has 

made changes to clarify two points. 

First, where the proposal referred only 

to acquisition of an ‘‘accounting firm’’— 

which commenters correctly noted is 

not a term defined in the Act or the 

Board’s rules—the final form now refers 

to a ‘‘public accounting firm,’’ which is 

defined in both the Act and the rules. 

Second, with respect to taking on 75 

percent or more of another firm’s 

principals, the final form includes 

language clarifying that the reference is 

to 75 percent of the persons who were 

principals of the other firm ‘‘as of the 

beginning of the reporting period.’’ 

Form 2 requires an annual affirmation 

related to the Act’s requirements that 

the firm consent to cooperate with the 

Board and enforce cooperation by the 

firm’s associated persons. Tracking the 

consent language included in Form 1, 

Form 2 requires the firm (1) to affirm its 

consent to cooperate with Board 

requests for testimony or documents, (2) 

to affirm that it has secured from each 

of its associated persons the required 

consents to cooperate with the Board, 

and (3) to affirm the firm’s 

understanding and agreement that its 

cooperation and compliance, and the 

securing and enforcing of consents from 

its associated persons, is a condition of 

its continued registration with the 

Board. 

One commenter seemed to 

misunderstand the proposal and 

suggested that the Board make clear that 

this requirement is an update of the 

Form 1 consent and is required only for 

new employees since a firm’s initial 

registration. The Form 2 affirmation 

does not impose a new substantive 

requirement but merely requires the 

firm to affirm that it remains aware of 

its continuing obligation to cooperate 

and that it has in fact been keeping up 

with its ongoing obligation to secure the 

requisite consents from all of its 

associated persons. 

The reporting framework includes 

accommodations for firms faced with 

potential non-U.S. legal obstacles to 

their ability to comply with Form 2 

requirements. One such accommodation 

is reflected in a note to the Form 2 

affirmation section. The note explains 

that the affirmation shall not be 

understood to include an affirmation 

that the firm has secured consents from 

associated persons that are unregistered 

foreign firms that assert that non-U.S. 

law prohibits them from providing the 

consent, as long as certain requirements 

concerning that assertion are satisfied. 

Two commenters expressed concern 

about the note’s provision that the 

registered firm (filing the Form 2) must 

have in its possession documents 

relating to the unregistered firm’s 

asserted conflict that would be 

sufficient to satisfy the requirements of 

Rule 2207(c)(2)–(4). The commenters 

expressed concern about whether that 

language effectively requires the 

registered firm (filing the Form 2) to 

assess the substance of the unregistered 

Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 29107 

non-U.S. firm’s conflict assertion. The 

note requires no such assessment by the 

registered firm, but only requires the 

firm to ascertain that the documents 

appear, on their face, to be the 

documents described in Rule 

2207(c)(2)–(4). 

Rule 2201 sets June 30 as the deadline 

for the annual filing of Form 2. The 

reporting period covered by the report 

would be April 1 to March 31. 

Commenters suggested alternatives, 

such as tying a firm’s reporting deadline 

to that firm’s fiscal year, to avoid what 

those commenters saw as unnecessary 

burdens on firms. In the Board’s view, 

a single filing deadline for all firms is 

more appropriate than varying 

deadlines tied to individual firms’ fiscal 

years. The Board has considered the 

comments about burden and has made 

changes that will address those 

concerns—such as allowing a firm to 

use its and its clients’ fiscal year data in 

reporting the fee billing information— 

without introducing varying reporting 

periods and deadlines for different 

firms. With those changes, the required 

Form 2 reporting does not involve any 

complexity or burden that makes it 

unreasonable to require all firms to 

supply the information according to the 

same schedule. 

Under the rules, the occurrence of 

specified events triggers an obligation to 

file a special report on Form 3. The list 

of reporting triggers reflects the Board’s 

decision, after consideration of 

comments, to drop some items from the 

list that was proposed and to refine the 

focus of other items. The changes and 

clarifications relate to a client’s 

unauthorized use of the firm’s name, 

reportable criminal and other 

proceedings, reportable new 

relationships, and changes in 

authorization to engage in the business 

of auditing. 

The Board has excluded from the final 

requirements one special reporting 

trigger that was proposed: An issuer’s 

unauthorized use of the firm’s name, 

such as by making a filing with the 

Commission that includes an audit 

report that the issuer falsely represents 

as having been issued by the firm. In 

proposing that item, the Board noted 

that it might protect investors and serve 

the public interest by drawing attention 

to a potential problem relatively 

quickly. The commenters who 

addressed the point expressed a view 

that this reporting requirement would 

be fundamentally about issuer conduct 

and, therefore, is more appropriately left 

to the Commission in the context of its 

disclosure framework and its framework 

for addressing Section 10A(b) reports 

from auditors. After consideration of 

those comments, the Board has decided 

not to adopt such a requirement at this 

time. 

The proposed rules included a 

requirement that a firm file a special 

report when it withdraws an audit 

report, but also provided an exception 

to that requirement if the issuer audit 

client had already disclosed the relevant 

information in a Form 8–K filing with 

the Commission. The views expressed 

by commenters on this point were 

similar to the views described above 

with respect to an issuer’s unauthorized 

use of a firm’s name. 

The Board is adopting this item as 

proposed. The point of this item is not 

to have the firm draw the Board’s 

attention to potential problems with an 

issuer’s financial statements. A 

withdrawn audit report is a risk 

indicator concerning the auditor’s 

conduct preceding the withdrawal, not 

merely a risk indicator concerning the 

issuer’s financial statements. The Board 

has a regulatory interest in being aware 

of that information and possibly 

following up on that information for 

reasons directly related to its oversight 

of auditors. 

Nor is the point of the item to have 

the firm draw the Board’s attention to a 

failure by the issuer to file a required 

Form 8–K. The Board’s interest is in the 

fact of the withdrawn audit report. In 

the usual case, the Board can obtain that 

information from issuer Form 8–K 

filings without requiring duplicative 

filing by the firm, but the Board cannot 

do so if the issuer does not file the Form 

8–K. For that reason, the Form 3 

requirement is limited to circumstances 

in which the information is not 

otherwise available to the Board through 

a Form 8–K filing. 

One commenter noted that if an issuer 

is no longer a client, the firm may not 

be in a position to monitor whether that 

former client has made the Form 8–K 

filing. Item 4.02(c) of Form 8–K, 

however, requires the issuer to provide 

the firm with a copy of the disclosures 

it is making in response to Item 4.02 no 

later than the day the issuer files the 

Form 8–K, and also requires the issuer 

to request that the firm furnish to the 

issuer a letter addressed to the 

Commission stating whether the firm 

agrees with the statements made by the 

issuer in response to Item 4.02. The firm 

should, therefore, generally be in a 

position to know whether the issuer has 

made the filing. 

As proposed, Form 3 would have 

required a firm to file a special report 

if a partner, shareholder, principal, 

owner, member, or audit manager of the 

firm became a defendant in criminal 

proceedings involving certain categories 

of offenses. After consideration of 

comments, the Board has narrowed this 

requirement in two respects. First, the 

Board has reformulated these Form 3 

reporting triggers to distinguish between 

proceedings that arise out of conduct in 

providing audit services or other 

accounting services for issuers and 

proceedings that do not arise out of such 

conduct. As to the latter category, the 

reporting obligation will be triggered 

only if the relevant individual provided 

at least ten hours of audit services for 

any issuer during the firm’s current or 

most recently completed fiscal year. 

Second, the Board has eliminated from 

the categories of relevant offenses two 

relatively broadly described categories: 

Crimes arising out of alleged conduct 

relating to ‘‘dishonesty,’’ and crimes 

arising out of alleged conduct that, if 

proven, ‘‘would bear materially on the 

individual’s fitness to provide audit 

services to issuers.’’ 

One commenter expressed 

uncertainty about whether a firm would 

need to report the event if the firm 

suspended or terminated the individual 

or prohibited the individual from 

providing audit services for issuers. The 

reporting obligation includes no such 

qualification. The firm’s reporting 

obligation is triggered when it becomes 

aware of the proceeding, and that 

obligation is not cut off if the firm 

terminates its relationship with the 

individual. 

Some commenters sought clarification 

about the inclusion of ‘‘managers’’ and 

‘‘members’’ within the scope of relevant 

individuals. One commenter asked 

whether ‘‘members’’ was meant to 

include employees generally. 

‘‘Members’’ is not meant to include all 

employees but, rather, is intended as it 

is often used in firms’ structures and 

parlance to distinguish those with 

certain ownership or governance rights 

from others. Some commenters noted 

that ‘‘managers’’ typically are not 

owners or partners and so questioned 

whether the Board intended to include 

them within the scope of this 

requirement. The Board is aware of the 

distinction and does intend the 

requirement to encompass managerlevel personnel. The Board has, 

however, referred in the final rules to 

‘‘audit manager’’ rather than merely 

‘‘manager,’’ to avoid any possible 

confusion about other sorts of managers, 

as the term is more generally used. 

Some commenters expressed concern 

about the information that Form 3 

would require the firm to provide about 

the proceedings that triggered the 

reporting requirement. Commenters 

suggested that providing descriptions of 

the proceedings could be burdensome, 

29108 Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 

4Rule 5301(b)’s prohibition on allowing such a 

person to ‘‘become or remain associated with’’ the 

firm is not a prohibition against any and all 

employment or other relationships, but only a 

prohibition against allowing the person to be an 

‘‘associated’’ person as that term is defined in 

Section 2(a)(9) of the Act and Board Rule 1001(p)(i). 

that the descriptions would be 

inherently subjective, and that the 

descriptions should not be in the public 

arena while the proceeding is ongoing. 

The Board has not made any changes 

related to this point. Form 3 requires the 

firm to list the statutes, rules, or legal 

duties that are alleged to have been 

violated, which involves no subjective 

or qualitative analysis, and requires a 

brief description of the alleged conduct, 

which can be drawn from the relevant 

complaint or charging document 

without creating any implication that 

the firm concedes anything about the 

allegations. If grounds exist, under Rule 

2300, for keeping the reported 

information confidential, the firm may 

request confidential treatment. 

Form 3 requires a firm to file a special 

report if it enters into certain specified 

relationships with individuals or 

entities that are currently subject to any 

of the following: (1) A Board 

disciplinary sanction suspending or 

barring an individual from being an 

associated person of a registered public 

accounting firm, (2) a Board order 

disapproving an entity’s application for 

registration, or (3) a Commission order 

under Rule 102(e) of the Commission’s 

Rules of Practice suspending or denying 

the privilege of appearing or practicing 

before the Commission. Commenters 

suggested that the scope of relevant 

individuals should be limited to those 

who provide audit services. Although 

the Board has made such a change to the 

similar Form 2 requirement, such a 

change is not appropriate for this Form 

3 requirement, which is generally 

intended to gather information about 

new relationships with persons or 

entities that are effectively restricted 

from providing audit services. In this 

context, the qualification suggested by 

commenters would have the effect of 

either negating the requirement entirely 

or transforming it into a requirement for 

a firm to report that a person or entity 

is violating such a restriction in 

connection with audits performed by 

the firm. For similar reasons, the Board 

has rejected suggestions to narrow the 

scope of consulting and professional 

services received by the firm that trigger 

this reporting requirement. 

Commenters also expressed concern 

about the burden associated with 

identifying the existence of the sanction 

or 102(e) order. Firms should 

understand, however, that to a 

significant extent that burden effectively 

exists regardless of whether the firm has 

a reporting obligation. Not only does the 

firm have an obvious need to know, for 

its own purposes, of any such 

limitations on the person’s ability to 

provide services, but Board Rule 5301(b) 

provides that ‘‘no registered public 

accounting firm that knows, or in the 

exercise of reasonable care should have 

known, of the suspension or bar of a 

person may permit such person to 

become or remain associated with it, 

without the consent of the Board, 

pursuant to Rule 5302, or the 

Commission.’’4

Form 3 requires a firm to file a special 

report regarding certain changes in its 

authorization to engage in the business 

of auditing or accounting in a particular 

jurisdiction. After considering 

comments, the Board has made wording 

changes to clarify three points: (1) The 

requirement is intended only to cover 

circumstances that involve a loss of the 

firm’s authorization to engage in the 

business of auditing or accounting; (2) 

the proposed phrase, ‘‘made subject to 

condition or contingencies,’’ was not 

intended to encompass conditions or 

contingencies that are broadly 

applicable to all firms licensed in the 

jurisdiction; and (3) the requirement to 

report new licenses or certifications, or 

changes in existing licenses or 

certifications, is limited to licenses and 

certifications that authorize the firm to 

engage in the business of auditing or 

accounting. 

The proposed rules would have 

required that special reports on Form 3 

be filed no later than 14 days after the 

triggering event. Several commenters 

expressed concern that 14 days was not 

sufficient time in which to review and 

assess an event and report the required 

information, and that this was 

particularly true for non-U.S. firms that 

may need to assess possible legal 

obstacles to reporting and prepare the 

materials necessary to comply with Rule 

2207. Commenters’ alternative 

suggestions included 30 days, 45 days, 

60 days, and 90 days. The Board is 

persuaded that a longer period than 14 

days is appropriate and is adopting a 

requirement to file special reports 

within 30 days of the triggering event. 

Commenters also raised questions 

about when, for certain reportable 

events, the ‘‘trigger’’ actually occurs. In 

particular, several triggering events are 

described in Form 3 in terms of when 

the firm has ‘‘become aware’’ that 

something has occurred. Commenters 

asked for clarification of what it means, 

in this context, to say that the firm has 

become aware of a matter. The Board 

has added a note to the beginning of 

Part II of Form 3 to specify that the firm 

is deemed to have become aware of the 

relevant facts on the date that any 

partner, shareholder, principal, owner, 

or member of the firm first becomes 

aware of the facts. The Board believes it 

is reasonable to expect a firm to have 

controls designed to ensure that any 

such person who becomes aware of 

relevant facts understands the firm’s 

reporting obligation and brings the 

matter to the attention of persons 

responsible for compliance with the 

obligation. 

As proposed, Rule 2205 would have 

required a firm to amend its filing 

within a fixed time after becoming 

aware of an error or omission. 

Commenters raised concerns about the 

practical difficulties posed in this 

context by reliance on the concept of a 

firm becoming ‘‘aware’’ of an error or 

omission. The Board recognizes those 

difficulties. Rather than prescribe 

requirements for firms to have systems 

and procedures to surface such errors or 

omissions and then report them within 

a prescribed time, the Board’s revised 

approach relies on the firm 

understanding its self-interest. The 

Board expects annual and special 

reports to be complete and accurate, and 

inaccuracies or omissions could form 

the basis for disciplinary sanctions for 

failing to comply with the reporting 

requirements reflected in Rules 2200 

and 2203 and the instructions to Forms 

2 and 3. Firms should be sufficiently 

motivated to have procedures to detect 

any need for amendments, and to 

amend filings as soon as possible, in 

order to mitigate the possibility of 

disciplinary sanctions for the inaccurate 

original filing. 

The amendment to Rule 4000 adds a 

paragraph providing that the Board, in 

the exercise of its inspection authority, 

may at any time request that a registered 

firm provide additional information or 

documents relating to information 

provided on Form 2 or Form 3, or 

relating to information that has 

otherwise come to the Board’s attention. 

The amendment provides that the 

request and response are considered to 

be in connection with the firm’s next 

regular or special inspection. In 

response to concerns raised by some 

commenters, the Board confirms that 

the information-gathering activity 

described in the amendment is an 

exercise of the Board’s inspection 

authority. It does not provide a basis for 

the Board to compel a firm to provide 

information beyond the scope of 

information encompassed by the 

inspection authority, or for purposes 

other than assessing compliance by the 

firm or its associated persons with the 

Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 29109 

5Section 104(a) of the Act. 

‘‘Act, the rules of the Board, the rules of 

the Commission, or professional 

standards, in connection with its 

performance of audits, issuance of audit 

reports, and related matters involving 

issuers.’’5

Annual and special reports will be 

made public on the Board’s Web site 

promptly upon being filed by a firm, 

subject to exceptions for information for 

which a firm requests confidential 

treatment. The amendments to Rule 

2300 require that a firm support a 

request with both a representation that 

the information has not otherwise been 

publicly disclosed and either (1) a 

detailed explanation of the grounds on 

which the information is considered 

proprietary, or (2) a detailed explanation 

of the basis for asserting that the 

information is protected by law from 

public disclosure and a copy of the 

specific provision of law. The 

amendments also provide that the firm’s 

failure to supply the required support 

constitutes sufficient grounds for denial 

of the request. 

In response to questions raised by 

commenters, the Board emphasizes that 

this approach to confidential treatment 

requests does nothing to change a firm’s 

right to seek review of an initial denial 

of confidential treatment. Initial 

decisions will continue to be made by 

the Director of Registration and 

Inspections, pursuant to delegated 

authority, under Rule 2300(h). A firm 

may, under Rule 5468, seek Board 

review of any denial. 

One commenter noted that 

confidentiality protection might arise 

from sources other than statutes and 

regulation, including common law, 

judicial orders, and contractual terms, 

and that the Board should more broadly 

define the scope of documentation that 

may be presented in support of a 

confidential treatment request. Rule 

2300(b), however, does not limit the 

scope of documentation that a firm may 

present to support its argument that the 

rule’s criteria for confidentiality are 

satisfied. The Board also agrees that 

‘‘applicable law related to the 

confidentiality of proprietary, personal, 

or other information’’ that may protect 

information from public disclosure is 

not limited to statutes and regulations. 

At the same time, however, a 

contractual agreement between two 

parties does not constitute ‘‘applicable 

law’’ and is unlikely to satisfy the rule’s 

criteria. 

Under proposed Rule 2207, a nonU.S. firm may initially withhold 

required information from Form 2 or 

Form 3 if it could not provide the 

information without violating non-U.S. 

law. If non-U.S. firm withholds 

information on that ground, it must 

have certain supporting materials, 

including (1) a copy of the relevant 

provisions of non-U.S. law, (2) a legal 

opinion concluding that the firm would 

violate non-U.S. law by submitting the 

information to the Board, and (3) a 

written explanation of the firm’s efforts 

to seek consents or waivers that would 

be sufficient to overcome the conflict 

with respect to the information. 

To address a concern raised by 

commenters, the Board has revised Rule 

2207(c)(4), and added a related note at 

the end of the rule, to make clear that 

the rule does not require a firm to repeat 

previously futile efforts to obtain 

consents and waivers. Specifically, Rule 

2207(c)(4) requires the firm to prepare 

and maintain a written representation 

that it has made ‘‘reasonable efforts’’ to 

obtain relevant consents and waivers. 

The note at the end of the rule makes 

clear that the ‘‘reasonable efforts’’ 

element of the rule does not require 

either (1) that the firm renew efforts 

with parties that have previously 

declined to provide consents or waivers 

with respect to similar types of 

information, or (2) that the firm seek 

consents or waivers from parties other 

than firm personnel and firm clients. 

In its initial proposal, the Board stated 

that it intended for the reporting 

requirements to take effect 21 days after 

Commission approval, with ‘‘catch-up’’ 

Form 3 filings due 14 days later. The 

Board has considered comments 

expressing concern that this is too 

ambitious a schedule, and the Board is 

now taking a different approach. The 

Board intends that the rules, rule 

amendments, and Forms 2 and 3 that it 

is adopting today will take effect on the 

date that is 60 days after Commission 

approval. This will build in more than 

ample lead time for firms to become 

aware of Commission approval of the 

rules and to prepare any reports that 

will be due after the rules take effect. 

III. Date of Effectiveness of the 

Proposed Rules and Timing for 

Commission Action 

Within 60 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the Board consents, the 

Commission will: 

(a) By order approve such proposed 

rules; or 

(b) institute proceedings to determine 

whether the proposed rules should be 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the proposed rules 

are consistent with the requirements of 

Title I of the Act. Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/pcaob.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number PCAOB 2008–04 on the subject 

line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number PCAOB 2008–04. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/pcaob/shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule that 

are filed with the Commission, and all 

written communications relating to the 

proposed rule between the Commission 

and any person, other than those that 

may be withheld from the public in 

accordance with the provisions of 5 

U.S.C. 552, will be available for 

inspection and copying in the 

Commission’s Public Reference Room, 

on official business days between the 

hours of 10 a.m. and 3 p.m. Copies of 

such filing will also be available for 

inspection and copying at the principal 

office of the PCAOB. All comments 

received will be posted without change; 

we do not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File No. 

PCAOB–2008–04 and should be 

submitted on or before July 20, 2009. 

29110 Federal Register / Vol. 74, No. 116 / Thursday, June 18, 2009 / Notices 

By the Commission. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–14294 Filed 6–17–09; 8:45 am] 

BILLING CODE 8010–01–P