In a recent survey of public companies assessing views on Sarbanes-Oxley a decade after its adoption, Protiviti also asked companies what they think of the PCAOB's recent suggestions that mandatory rotation might improve auditing. Nearly half of all survey respondents agreed that rotation would have a positive impact. Among large accelerated filers, Protiviti said 47 percent of companies were in favor of rotation, and 60 percent of nonaccelerated filers agreed with the idea as well. Even Protiviti was taken back by the numbers. “These results are somewhat surprising as it can be expensive and time consuming to change external auditors, and such an action would represent a very substantial change in the external auditor arrangements for companies,” the firm noted in its report. “Further, the limited number of global network accounting firms significantly restricts rotation options." [CW, Earlier]
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Are Accounting Firms Getting Cheated by the PCAOB?
You may have forgotten, but last year the PCAOB established some new rules that require its members to file annual reports on Forms 2, 3, and 4 with the Board. These annual reports aren’t the glossy paged marketing tools filled with smiling faces that you may be thinking of, nor do they contain an financial information. They mostly consist of information that the PCAOB wants to know in case a firm changes its address, whether your firm hires shady characters, or finds itself in some serious legal trouble (take note Big 4).
Because all this reporting is a pain in the ass for the Board, a modest charge has been established to “recover the costs of processing and reviewing applications and annual reports,” according to a statement released by the PCAOB.
Now before you get all huffy about it, this is allowed by Michael Oxley’s favorite piece of legislation and now that the Board is getting around to requiring firms to submit the annual reports (inaugurals are due June 30), a fee only seemed appropriate and necessary.
Starting this year, registered firms will be charged the following:
Firms with more than 500 issuer audit clients and more than 10,000 personnel – $100,000
Other firms with more than 200 issuer audit clients and more than 1,000 personnel – $25,000
All other firms – $500
PLUS! The minimum registration fee is being increased to $500 because “The Board believes it is appropriate at this time to raise that fee to $500 to align it more closely with the minimum annual fee.”
In the grand scheme of things, the new annual fee and the increased registration fee aren’t really worth getting too worked up over but does make you wonder if accounting firms are getting the most bang for their buck vis-à-vis the PCAOB.
Oh sure, the annual inspections are a hoot and they’ll nail a shiesty accountant here and there but what about the guidance the Board has been issuing lately?
If the best the Board can do is churn out a reminders about bizarro transactions that belittles auditors (but don’t bother giving any examples) and proposals on how auditors should carry on a conversation, some people might start demanding a little more substance out of their watchdog.
PCAOB Release No. 2010-002 [PCAOB]
The PCAOB Has Added Some Interesting New Language to Inspection Reports
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