Document ID: SEC-2006-1655-0001
Agency: sec
Document Type: Notice
Title: Public Company Accounting Oversight Board: Tax services for persons in financial reporting oversight roles; propose rule filing
Posted Date: 2006-12-20T05:00Z

[Federal Register: December 20, 2006 (Volume 71, Number 244)]
[Notices]               
[Page 76392-76393]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de06-135]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54938; File No. PCAOB-2006-02]

 
Public Company Accounting Oversight Board; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Adjusting 
Implementation Schedule of Rule 3523, Tax Services for Persons in 
Financial Reporting Oversight Roles

December 14, 2006.
    Pursuant to Section 107(b) of the Sarbanes-Oxley Act of 2002 (the 
``Act''), notice is hereby given that on October 31, 2006, the Public 
Company Accounting Oversight Board (the ``Board'' or the ``PCAOB'') 
filed with the Securities and Exchange Commission (the ``SEC'' or 
``Commission'') the proposed rule change described in Items I and II 
below, which items have been prepared by the Board. The PCAOB has 
designated the proposed rule change as ``constituting a stated policy, 
practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule'' under Section 
19(b)(3)(A)(i) of the Securities Exchange Act of 1934 (``Exchange 
Act'') (as incorporated, by reference, into Section 107(b)(4) of the 
Act), which renders the proposal effective upon receipt of this filing 
by the Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.

I. Board's Statement of the Terms of Substance of the Proposed Rule 
Change

    The PCAOB is filing with the SEC an adjustment of the 
implementation schedule for Rule 3523, Tax Services for Persons in 
Financial Reporting Oversight Roles. Specifically the Board will not 
apply Rule 3523 to tax services provided on or before April 30, 2007, 
when those services are provided during the audit period and are 
completed before the professional engagement period begins. The PCAOB 
is not proposing any textual changes to the Rules of the PCAOB.

II. Board's Statement of the Purpose of, and Statutory Basis for, the 
Proposed Rule Change

    In its filing with the Commission, the Board included statements 
concerning the purpose of, and basis for, the proposed rule and 
discussed any comments it received on 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 Rule Change

(a) Purpose
    On July 26, 2005, the Board adopted certain rules related to 
registered public accounting firms' provision of tax services to public 
company audit clients. The rules were designed to address certain 
concerns related to auditor independence when auditors become involved 
in marketing or otherwise opining in favor of aggressive tax shelter 
schemes or in selling personal tax services to individuals who play a 
direct role in preparing the financial statements of public company 
audit clients. As part of this rulemaking, the Board adopted Rule 3523 
to prohibit registered public accounting firms from providing any tax 
services to persons in a financial reporting oversight role at an audit 
client. Rule 3523 was approved by the Securities and Exchange 
Commission on April 19, 2006. Under the current implementation schedule 
set by the Board, Rule 3523 will not apply to tax services being 
provided pursuant to an engagement in process on April 19, 2006, 
provided that such services are completed on or before October 31, 
2006.\1\
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    \1\ PCAOB Release No. 2006-001 (March 28, 2006), at 2-3.
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    Rule 3523 applies to all tax services performed for persons in a 
financial reporting oversight role during the ``audit and professional 
engagement period.'' The Board intends to revisit the application of 
Rule 3523 to tax services provided during the period before a 
registered public accounting firm becomes auditor of record for an 
audit client--that is, during only the ``audit period.'' \2\ 
Accordingly, the Board has decided to adjust the implementation 
schedule for Rule 3523, as it applies to tax services provided during 
the ``audit period,'' while it revisits this aspect of the rule. 
Specifically the Board will not apply Rule 3523 to tax services 
provided on or before April 30, 2007, when those services are provided 
during the audit period and are completed before the professional 
engagement period begins.\3\
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    \2\ Consistent with the SEC's independence rules, 17 CFR 210.2-
01(f)(5), the phrase ``audit and professional engagement period'' is 
defined to include two discrete periods of time. The ``audit 
period'' is the period covered by any financial statements being 
audited or reviewed. Rule 3501(a)(iii)(1). The ``professional 
engagement period'' is the period beginning when the accounting firm 
either signs the initial engagement letter or begins audit 
procedures and ends when the audit client or the accounting firm 
notifies the SEC that the client is no longer that firm's audit 
client. Rule 3501(a)(iii)(2).
    \3\ This will apply whether there is an engagement in process on 
April 19, 2006 or not.
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    The implementation schedule for Rule 3523 as it applies to tax 
services provided during the professional engagement period remains 
unchanged.\4\ Accordingly, as of November 1, 2006, registered public 
accounting firms must comply with Rule 3523 as it relates to tax 
services provided during the professional engagement period.
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    \4\ PCAOB Release No. 2006-001 (March 28, 2006), at 3.
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(b) Statutory Basis
    The statutory basis for the proposed rule change is Title I of the 
Act.

B. Board's Statement on Burden on Competition

    The Board does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.

C. Board's Statement on Comments on the Proposed Rule Change Received 
From Members, Participants or Others

    The Board did not solicit or receive written comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Exchange Act (as incorporated, by reference, into 
Section 107(b)(4) of the Act), in that the proposed rule change 
constitutes a stated policy, practice, or interpretation with respect 
to the meaning, administration, or enforcement of an existing rule of 
the

[[Page 76393]]

PCAOB. At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Exchange Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
is 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 rule-comments@sec.gov. Please include 

File Number PCAOB-2006-02 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washingtion, DC 20549-1090.

All submissions should refer to File Number PCAOB-2006-02. 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 change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change 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. Copies of such 
filing also will 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 Number PCAOB-
2006-02 and should be submitted on or before January 10, 2007.

    By the Commission.
Nancy M. Morris,
Secretary.
 [FR Doc. E6-21659 Filed 12-19-06; 8:45 am]

BILLING CODE 8011-01-P