The Securities and Exchange Commission voted today to approve Public Company Accounting Oversight Board’s 2022 budget, as well as its annual accounting support fee.
The PCAOB announced its proposed budget of $310.3 million and its annual support fee of $297.9 million — with $267.2 million from public company issues and $30.7 million coming from registered broker-dealers — in November (see
“I support this $310 million budget and annual support fee request — an 8% increase over 2021 — because the PCAOB requires additional resources to perform its work on behalf of the public every day,” said SEC Chair Gary Gensler.
Other commissioners used the occasion to offer comments that reflected the recent tumultuous history of the board, with the firing of its chair earlier this year and an almost complete replacement of board members.
Commissioner Hester Peirce, for instance, expressed serious concerns about the ramifications of the shakeup earlier this year, and issued a strong warning that the board should steer clear of politics.
“The troubling decision earlier this year to remove the board impaired the PCAOB’s effectiveness as an independent audit regulator,” she said. “The new board now faces a credibility deficit for which no amount of money in the budget we are considering today can compensate. The one thing that can offset that deficit, however, is an unwavering and demonstrated determination by the board to stick to the PCAOB’s mandate and avoid extraneous political or social issues. The board, for example, should not attempt to recast itself as an environmental, social, and governance regulator despite the allure of such issues in Washington these days. Each of the new board members instead should leave politics at the door and focus solely on bringing his or her considerable talent and expertise to bear in a united effort to improve the quality of financial audits.”
Commissioner Elad Roisman echoed Peirce's concerns. "I remain deeply troubled by the lack of transparency and process with which the commission removed and replaced the previous board chairman and sought to fill all five directors’ seats, including those that were occupied by directors whose terms had not ended," he said. "The commission’s actions earlier this year risked tainting the independence of the board and undermining the steadiness of its work and its perception in the markets. I am saddened that the new board will inherit these added challenges."
Other commissioners, however, saw the new budget as an opportunity for the PCAOB to move beyond an era of lax enforcement.
“I hope the new board will bring new focus,” said Commissioner Allison Herren Lee. “In recent years, we’ve seen enforcement cases drop by approximately two-thirds, the number of inspection reports issued since 2018 fall to just over half of prior levels (a big drop even considering COVID-related travel restrictions), and dozens of audit standards in need of modernization. There is much work to be done. So I’m pleased to see that next year’s budget represents a significant increase in staffing levels and hope that portends renewed commitment to robust inspection and enforcement, expeditious standard-setting, and active public engagement.”
Commissioner Caroline Crenshaw also noted that she was happy to see that the budget provided for additional staff, as well as more investor engagement and advisory group activities. The previous PCAOB chair had been working to reduce the board’s number of outside advisors.
