04-7211. Public Company Accounting Oversight Board; Notice of Filing and Order Granting Accelerated Approval of Proposed Amendment to Registration Deadline for Non-U.S. Public Accounting Firms  

  • Start Preamble March 25, 2004.

    Pursuant to section 107(b) of the Sarbanes-Oxley Act of 2002 (the “Act”), notice is hereby given that on March 15, 2004, the Public Company Accounting Oversight Board (the “Board” or the “PCAOB”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule amendment 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 amendment from interested persons and is approving the proposal on an accelerated basis.

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

    On March 9, 2004, the Board adopted a rule amending PCAOB Rule 2100, “Registration Requirements for Public Accounting Firms,” to change the effective date of the registration requirement for foreign public accounting firms. The proposal changes the effective date of that requirement to July 19, 2004. PCAOB Rule 2100, as the Board proposes to amend it, is set out below. Proposed new language is in italics; proposed deletions are in [brackets].

    Text of the Proposed Rule Change

    Rules of the Board

    * * * * *
    Start Printed Page 16989

    Section 2. Registration and Reporting

    Part 1—Registration of Public Accounting Firms

    Rule 2100. Registration Requirements for Public Accounting Firms

    Effective October 22, 2003 (or, for foreign public accounting firms, [April] July 19, 2004), each public accounting firm that—

    (a) prepares or issues any audit report with respect to any issuer; or

    (b) plays a substantial role in the preparation or furnishing of an audit report with respect to any issuer

    must be registered with the Board.

    * * * * *

    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 III 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

    As originally proposed, the Board's registration rules would require that, effective April 19, 2004, a foreign public accounting firm that prepares or issues any audit report with respect to any issuer, or plays a substantial role in the preparation or furnishing of an audit report with respect to any issuer, must be registered with the Board. The purpose of the proposed rule is to change the effective date of that requirement to July 19, 2004.

    (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 rule will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule changes the effective date of the registration requirement for foreign public accounting firms to July 19, 2004.

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

    The Board released the proposed rule for public comment as part of a group of proposed rules related to Board oversight of foreign public accounting firms in PCAOB Release No. 2003-024 (December 10, 2003). A copy of PCAOB Release No. 2003-024 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 22 written comments. While there was broad support for the Board changing the effective date of the registration requirement to July 19, seven commenters, who included accounting firms, profession-based organizations and a representative of a foreign government, suggested the Board further extend the registration deadline.

    The Board proposed the 90-day extension of the effective date of the registration requirement to allow non-U.S. accounting firms additional time to consider the Board's framework for how the Board would conduct its oversight of such firms, should they choose to register. Given that the cooperative framework was outlined in October of last year, the Board believes that 90 days is an adequate amount of time to extend the effective date of the registration requirement. As such, the final rule is identical to the proposed rule.

    III. Commission's Finding and Order Granting Accelerated Approval of Proposed Rule Change

    The proposed rule change would extend the effective date of the registration requirement for foreign public accounting firms by 90 days (until July 19, 2004). This would provide additional time for foreign firms to prepare and submit their registration applications to the PCAOB before the effective date of the registration requirement.

    Under section 102(c)(1) of the Act and PCAOB Rule 2106(b), the Board has 45 days within which to act on a registration application; therefore, a prospective applicant would need to submit its application within 45 days of the deadline to allow the Board sufficient time to act on its application. Since the April 19th deadline is now less than 45 days in the future, if a foreign firm has not already submitted an application for registration, the Board may not have sufficient time to act on that firm's application before the current deadline. If the proposed rule change is not given accelerated effectiveness, the rule change would not take effect until after the April 19th deadline, which would undermine the purpose of the rule change. The proposed rule change would help to eliminate any confusion or uncertainty relating to the impending effective date of the registration requirement for foreign public accounting firms.

    On the basis of the foregoing, the Commission finds that the extension is consistent with the requirements of sections 102, 106, and 107(b) of the Act and the securities laws and is necessary and appropriate in the public interest and for the protection of investors.

    The Commission also finds good cause to approve the proposed rule change on an accelerated basis.[1] The Commission believes that the proposed rule change would benefit both the PCAOB and accounting firms by allowing non-U.S. accounting firms additional time to consider the Board's framework for conducting its oversight of foreign registered public accounting firms and to prepare and submit their registration applications in sufficient time for the Board to act on their applications before the registration deadline. The public will benefit from the orderly implementation of international auditor oversight. Also, the proposed rule change would provide the Board with additional time to work with its foreign counterparts in developing cooperative arrangements to accomplish the goals of the Act without subjecting foreign firms to unnecessary burdens or conflicting requirements and would help to eliminate any confusion relating to the impending registration deadline until the firms have had an opportunity to consider the Board's framework. The Commission believes that it is in the public interest to approve the proposed rule amendment as soon as possible so that sufficient advance notice of the Board's extension of the registration deadline for non-U.S. public accounting firms may be provided in order to avoid unnecessary burdens on firms attempting to comply with the Board's original registration requirements.

    Accordingly, the Commission believes that good cause exists, consistent with sections 102, 106 and 107 of the Act, and section 19(b) of the Exchange Act, to approve the proposed rule change on an accelerated basis. Start Printed Page 16990

    Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed amendment is consistent with the Act. Comments may be submitted electronically or by paper. Electronic comments may be submitted by: (1) Electronic form on the SEC Web site (http://www.sec.gov) or (2) e-mail to rule-comments@sec.gov. Mail paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File No. PCAOB-2004-01; this file number should be included on the subject line if e-mail is used. To help us 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). Comments are also available for public inspection and copying in the Commission's Public Reference Room, 450 Fifth Street, NW., Washington, DC 20549. We do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All comments should be submitted on or before April 30, 2004.

    IV. Conclusion

    It is therefore ordered, pursuant to sections 102, 106 and 107 of the Act and section 19(b)(2) of the Exchange Act that the proposed rule change (File No. PCAOB-2004-01) be and hereby is approved on an accelerated basis.

    Start Signature

    By the Commission.

    Jill M. Peterson,

    Assistant Secretary.

    End Signature End Preamble

    Footnotes

    1.  Section 107(b)(4) of the Act states that paragraphs (1) through (3) of section 19(b) of the Exchange Act, with certain amendments, govern Commission approval of the rules of the Board. Section 19(b)(2) of the Exchange Act provides for the Commission to approve rules on an accelerated basis if “the Commission finds good cause for so doing and publishes its reasons for so finding.”

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    [FR Doc. 04-7211 Filed 3-30-04; 8:45 am]

    BILLING CODE 8010-01-P

Document Information

Published:
03/31/2004
Department:
Securities and Exchange Commission
Entry Type:
Notice
Document Number:
04-7211
Pages:
16988-16990 (3 pages)
Docket Numbers:
Release No. 34-49473, File No. PCAOB-2004-01
EOCitation:
of 2004-03-25
PDF File:
04-7211.pdf