Bracing for bigger expenses and reduced collections, audit regulators are asking the Securities and Exchange Commission for permission to increase the support fee billed to public companies.

Mark Olson, chairman of the Public Company Accounting Oversight Board, sent a letter to all five commissioners asking for permission to increase the fee assessed to publicly listed registrants by $5.6 million to $157.4 million. That increased amount would be spread across all registrants based on their market capitalizations.

The PCAOB has already submitted to the SEC and received approval for its 2009 support fee of $151.8 million and its 2009 budget of $157.6 million, with the difference covered by a working capital reserve. That budget already represents a 9 percent increase in the support fee charged in 2008. The board is asking for the additional fee because it anticipates some difficulty in collecting fees this year based on current economic conditions and because it anticipates increased costs related to inspections and to overseeing audits of non-public broker-dealers.

“Among other things, since the allocation of the accounting support fee is weighted toward companies with greater average monthly market capitalizations, failure of even a few large companies to pay their assessments could have a significant impact on the PCAOB’s collection rate,” Olson wrote to the commissioners. General Motors, for example, is already signaling it could be headed for bankruptcy, and experts say scores of companies are on the same path.

Olson acknowledges the board is not authorized to spend any increased funding until it submits and gets approval on a supplemental budget, which the board is planning. The supplemental budget will take into account any new responsibility the board may gain to oversee audits of non-public broker-dealers, an idea proposed in an amendment to Sarbanes-Oxley as a result of high-profile broker frauds like the Bernard Madoff ponzi scheme.

The supplemental budget also will take a fresh look at strengthening the board’s inspection of non-U.S. audit firms (an area that some board members said during the budgeting process needs more resources), enhancing documentation of planning and fieldwork related to inspections, and enhancing enforcement resources to accommodate an increased workload.

Olson said the board needs to request permission to bill the fee before seeking permission to spend the money because of the timing and logistics related to billing. The board’s working capital reserve only covers projected cash needs for the first five months of 2009, he told the commissioners. “Moreover, billing issuers a second time during 2009 to cover the supplemental budget would, at a minimum, present considerable operational challenges and additional costs for the PCAOB,” he said.

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