The Securities and Exchange Commission on Tuesday approved the Public Company Accounting Oversight Board’s request for a 6 percent budget increase. But the thumbs-up for the $144.6 million budget for 2008 came with reservations, particularly from commissioner Paul Atkins, who voted against it.
Atkins’ sticking point is the 3.3 percent increase in the PCAOB board members’ salaries, which he called “disproportionately high.” The increases will raise chairman Mark Olson’s pay by $21,000 to $654,406 and each of the other board members by $17,000 to $531,995.
To back up his disfavor of these raises, Atkins gave a short presentation showing that the board members’ salaries are much higher than those of top public-sector officials, including the president of the United States (who makes $400,000). “In case you were wondering, the [PCAOB] chairman makes more than all of us sitting up here earn combined,” Atkins said of he and the three other commissioners, including SEC chairman Christopher Cox.
While the increase in the PCAOB’s budget will help the board hire up to 30 more employees in the talent-crunched accounting field, the board itself hasn’t had any trouble attracting members, Atkins noted.
The SEC is tasked under the Sarbanes-Oxley Act with approving the PCAOB annual budget. It changed its internal procedures last July to make the process for approving the nongovernment, nonprofit organization’s budget more formal. Tuesday’s meeting reflected that the two boards haven’t always seen eye to eye during the budget discussions.
“I don’t think we should hide the fact that we might have different perspectives, but we found the SEC to be very straightforward with us,” Olson said, when asked what he thought about the 2008 budget process. “We may have differences in opinion and may see things differently. My experience tells me we will find ways to work them out.”
The SEC staff worked closely with the PCAOB’s staff on the 2008 budget, following a timeline the commission created last year. It works like this: The PCAOB provides the commission with its outlook for the next budget year in March, followed by a draft budget in July. After the SEC staff has its say on budget, the PCAOB signs off on it by the end of November. The SEC has until December 23 to give final approval.
Last month, PCAOB board member Charles Niemeier called the budget process “disturbing,” saying he felt that he and the other board members had little ability to provide any input on the 2008 budget.
The SEC commissioners said on Tuesday that they felt otherwise, noting that the new process has been an improvement. They asked that the PCAOB improve its strategic plan, however, and provide more detailed information on its future goals. The SEC wants future iterations of the PCAOB’s report on its issues and outlook to better coincide with the budget process.
“As chairman Olson knows, the strategic plan in connection with 2008 was not in my view fully responsive to what the commission contemplated and called for in its budget rule,” said commissioner Kathleen Casey, who also voiced her dissatisfaction with the board members’ raises but voted in favor of the new budget.