Today, the Commission approved new standards for firms that wish to maintain their registration with the Public Company Accounting Oversight Board (PCAOB). I’m pleased to support this rule because it helps the PCAOB maintain an accurate public record of registered firms.
The new rule states that if a firm currently registered with the PCAOB fails to both file their required annual reports and pay their annual fees for two years in a row, a formal process to withdraw their registration would begin.
If a firm isn’t filing statutory annual reports or paying their dues, it’s logical to presume the firm is inactive. Thus, it’s appropriate not to let such firms market themselves to the public as being registered with the PCAOB.
I’m glad to see, though, that the new standard includes a 60-day waiting period before finalizing a firm’s withdrawal. During this time, firms will have an opportunity to send notice of their intention to remain registered.
There are 1,544 public accounting firms currently registered with the PCAOB. Of these firms, though, 80 did not file annual reports on Form 2 and did not pay annual fees for 2022 and 2023. Further, none of the 80 firms have issued an audit report for any public company issuer between January 1, 2021, and August 31, 2024.
Under the new standard, the PCAOB would now have an effective way to remove firms from registration that have ceased to exist, are non-operational, or have demonstrated through inaction that they no longer wish to remain registered.
I would like to thank the staff and Board members of the PCAOB for their diligent work on this matter.
I’d also like to thank my colleagues at the SEC for their work on this matter, including:
Paul Munter, Shaz Niazi, Mai-Khoi Nguyen-Thanh, and Greg Hillson from the Office of the Chief Accountant;
Bryant Morris, Peggy Kim, and Eduardo Aleman from the Office of the General Counsel;
Lauren Moore, Oliver Richard, Mengxin Zhao, Lyndon Orton, Andrew Glickman, and CHarles Woodworth from the Division of Economic and Risk Analysis;
Ryan Wolfe, Ian Rupell, and Dana Schwartz from the Division of Enforcement; and
Sarah Lowe, Diane Marciano-Fritz, Elizabeth Garrett, and Stephanie Sullivan from the Division of Corporation Finance (OCA).
