03-10782. Securities Act of 1933, Release No. 8223/April 25, 2003, Securities Exchange Act of 1934, Release No. 47746/April 25, 2003; Order Regarding Section 101(d) of the Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act of 2002 (“Act”) established the Public Company Accounting Oversight Board (“PCAOB”) and charged it with the responsibility of overseeing the audits of public companies that are subject to the U.S. Federal securities laws. Under the Act, the PCAOB's duties include registering public accounting firms; establishing auditing, quality control, ethics, independence and other standards relating to public company audits; conducting inspections, investigations and disciplinary proceedings of registered accounting firms; and enforcing compliance with the Act. The Commission has authority to oversee the operations of the PCAOB, including but not limited to the authority to appoint or remove members of the PCAOB, to approve its budget and rules, and to entertain appeals of adverse PCAOB inspection reports and disciplinary actions.

Section 101(d) of the Act provides that, no later than 270 days after the establishment of the PCAOB, the members of the PCAOB “shall take such action (including hiring of staff, proposal of rules, and adoption of initial and transitional auditing and other professional standards) as may be necessary or appropriate to enable the Commission to determine * * * that the Board is so organized and has the capacity to carry out the requirements of [the Act], and to enforce compliance with [the Act] by registered public accounting firms and associated persons thereof.” The purpose of the provision was to assure that the PCAOB is prepared to undertake promptly its statutory responsibilities.

Since the appointment of its board members, the PCAOB has undertaken many actions to demonstrate its readiness to carry out the requirements of the Act. For example, it has hired or substantially completed the hiring process to fill, on a permanent or acting basis, a majority of its key positions, including the Director of Registration and Inspections and the Chief Auditor. The PCAOB has adopted by-laws and proposed for public comment a code of conduct and ethical standards for PCAOB members and staff.

The PCAOB has adopted its budget for the calendar year 2003. It also has determined and submitted to the Commission a proposed formula for the computation of an Annual Accounting Support Fee for calendar year 2003. The PCAOB has adopted, and submitted to the Commission for approval, a plan for assessment, billing and collection of registration fees, annual fees and Annual Accounting Support Fees.

The PCAOB has begun to adopt rules for the profession. For example, it has proposed rules relating to the registration of public accounting firms and has supplemented its comment process on that proposal by holding a public roundtable meeting to solicit views on issues relating to the registration of non-U.S. public accounting firms. The PCAOB has adopted interim professional standards relating to auditing, attestation, independence, quality control, and ethical conduct of auditors. These standards are the subject of a separate Commission Order. After the date of that Order, no professional standards in these areas, as they relate to the audit of public companies, will take effect unless approved by the PCAOB under its statutory rulemaking process and published for comment and approved by the Commission. The PCAOB also has issued a policy statement setting forth a blueprint for its future standard-setting procedures, including a planned review of the interim standards.

Finally, the PCAOB has developed a plan for inspecting accounting firms. It has also prepared a plan to develop procedures and standards governing disciplinary proceedings and the imposition of sanctions against accounting firms and their associates.

As a result of these actions, but without this Order constituting approval of any specific PCAOB action, the Commission determines that the PCAOB is so organized and has the capacity to carry out the requirements of the Act and to enforce compliance with the Act by registered public accounting firms and associated persons thereof, as required by section 101(d) of the Act. Accordingly,

It is Ordered that the Commission hereby determines that the PCAOB has satisfied the requirements of section 101(d) of the Act.

By the Commission.

Jonathan G. Katz,

Secretary.