The Public Company Accounting Oversight Board plans to ask the Securities and Exchange Commission for a 9-percent budget increase for 2009. The requested $157.6 million budget will enable the board to handle recent recommendations made by a Treasury Department advisory group, along with audit challenges expected to grow from the credit crisis, board members said today before unanimously approving the request.
“Current market conditions suggest that our inspectors may be dealing with even more complex issues next year when they review 2008 audits,” said PCAOB Chairman Mark Olson. “Moreover, we plan to continue to push firms to continuously improve their quality controls and risk management programs in order to assure that they perform the highest quality audits.”
The PCAOB is funded by the registration fees of publicly traded companies and the accounting firms that audit them, and its budget is prepared cooperatively by the audit firm overseer’s budgeting staff and the SEC staff. The budget requires SEC approval.
Last year, the SEC commissioners agreed to the PCAOB’s 6-percent budget increase, but expressed reservations about the projected 3.3-percent pay boost for the board members. However, the SEC staff has a say on the PCAOB’s budget every year before the board votes on it and puts it before the commissioners.
On Tuesday, the PCAOB did not say whether board members are scheduled to get a pay-raise next year, but they did note that the budget will help the board retain current staffers, as well as recruit new accountants. More than 70 percent of the budget goes toward personnel expenses. The board wants to have 531 employees, or 46 new hires, by the end of next year. About one-half of them are involved with the PCAOB’s inspections.
In 2009, the PCAOB is scheduled to inspect the 11 largest accounting firms — as its auditors do every year — along with 200 U.S. companies, which are subject to review every three years. The board is also responsible for more than 100 inspections of overseas firms.
Earlier this year, the Treasury’s Advisory Committee on the Auditing Profession made 16 recommendations for the PCAOB to address. The group’s requests included requiring privately held audit firms to make their financial statements public, and monitoring firms’ risk for failure.