The Public Company Accounting Oversight Board will increase its staffing by 50 percent next year, from 300 to 450, following the approval of a $152.8 million budget for calendar year 2005. The board expects to spend nearly two-thirds of the total budget on staffing, including salary, benefits and hiring expenses.
The majority of those new hires will be auditors who will inspect more than 1,300 public accounting firms who are registered to audit financial statements of U.S. public companies. Inspections began in 2003 with a limited sampling, but increased in 2004 and will increase again as a result of new staffing in 2005.
The budget carves out $35.8 million to invest in IT projects and staffing, including a new risk assessment system to identify financial and other risks, new systems to manage inspection data and investigations, and Web tools to enable public access to rules and standards.
The PCAOB intends to inspect annually the nine largest firms that audit more than 100 public companies, and inspect the remainder at least every three years. The board’s goal is to inspect 10 percent of the major firms’ public company engagements. The inspection process does not seek to re-audit financial statements, but review the auditor-client engagement and how the auditor operates as a business.
Also last week, the Board proposed a rule governing subpoena requests. The rule would prescribe specific procedural steps by which a party to a Board disciplinary proceeding could request the issuance of a subpoena to obtain documents or testimony for the proceeding.
Also last week, the PCAOB proposed a set of procedures for seeking subpoenas related to board disciplinary proceedings. The proposed procedures do not change PCAOB’s authority with regard to subpoenas, but simply spell out the process for requesting them, according to a board spokesperson.
The PCAOB won authority from the SEC to tap into its subpoena process earlier this year, to address concerns about accessing information held by unwilling witnesses. While PCAOB has authority over accounting firms, it does not have authority over the public companies they audit.
FASB Launches Project To Codify Accounting Standards
The Financial Accounting Standards Board is looking for a few good accountants to assist with its recently launched codification project – the unenviable task of gathering all relevant U.S. and international accounting standards and assembling them into a single-source reference.
Tom Hoey, project director for FASB’s codification project, said FASB expects the project to span three to five years, beginning with collecting all the necessary content and literature. Then FASB plans to deploy a handful of people who are expert in certain content areas to begin mapping the information from existing standards into a new codification and synthesizing the language to create a cohesive document. The goal is to create a streamlined source for accounting standards, which will ease research and ultimately compliance.
Hoey said FASB is braced for the likelihood that there will be conflicts in the literature, which it will examine and resolve as they arise, but the project is not expected to drive FASB’s agenda. “We don’t expect this to result in any true standard-setting,” he said.
However, the project is expected to enhance the convergence process to international standards, enabling better comparisons, Hoey said It also will re-create the manner in which FASB sets standards in the future because it will focus on amending the codification.
See the box at right for details, and for contact information if you'd like to assist with the project.
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