On December 17, 2020, the SEC voted to approve the 2021 budget of the Public Company Accounting Oversight Board (PCAOB) and the associated annual accounting support fee. The PCAOB monitors the audits and auditors of the financial statements that are submitted by registered broker-dealers and issuers. Section 109 of the Sarbanes-Oxley Act of 2002 requires the PCAOB to establish, with SEC approval, a reasonable accounting support fee to fund its operations.
The 2021 PCAOB budget totals $287.3 million, an increase of approximately 0.9% from the previous year’s budget of $284.7 million. This reflects changes dictated by the current remote working environment, for instance, a drop in travel expenditure. The accounting support fee, which decreased by an estimated 2.3% from the 2020 SEC-approved accounting support fee of $270.2 million, totals $263.9 million, of which:
$27.7 million will be assessed on registered broker-dealers
$236.2 million will be assessed on public companies
The accounting support fee estimates the PCAOB’s annual budget, with variances typically related to: 1) PCAOB expenditures and certain timing differences in fee collections; 2) modifications to the working capital reserve; and 3) the potential unused funds from the previous year’s budget being carried forward into the accounting support fee calculation.
The Sarbanes-Oxley Act of 2002, which established the PCAOB, gives the SEC oversight responsibility over the PCAOB. That charge includes evaluating and approving the PCAOB’s budget and accounting support fee each year. The SEC and the PCAOB also collaborate on a number of issues, including standard setting, inspections, and enforcement, primarily via regular staff meetings in addition to direct communicationbetween the SEC and the PCAOB’s Board.
The PCAOB will continue distributing invoices to registered issuers and broker-dealers using the aforementioned allocation pursuant to the PCAOB’s funding rules.