PCAOB's 11.5% Budget Hike Includes Dodd-Frank Costs

The PCAOB on Tuesday approved an 11.5% increase in its 2011 fiscal-year budget, a spending plan that the board says reflects its new responsibilities under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The board also approved its five-year strategic plan.


The $204.4 million budget is $21.1 million more than the 2010 budget of $183.3 million. The board said the increase is necessary, in part, to address the new oversight of broker-dealer auditors, following passage of the Dodd-Frank Act. The budget is subject to SEC approval.


“More than half of the projected 2011 headcount increase will be devoted to implementation of the provisions of the Dodd-Frank Act that expand the board’s inspection, standard setting, and enforcement authority to the audits and auditors of Securities and Exchange Commission-registered securities broker-dealers,” PCAOB Acting Chairman Daniel L. Goelzer said in a press release. “While the board may ultimately conclude that the auditors of some categories of brokerage firms should be exempted from oversight, creating a program to oversee broker-dealer audits will be a major undertaking and will require significant resources.”


The majority of new expenses in the 2011 budget are increases in staffing, information technology and facilities. The PCAOB linked the resource needs primarily to certain changes in its responsibilities, such as the broker-dealer oversight as well as enhanced requirements for performing and documenting PCAOB inspection work and a potential increase in the number of litigated enforcement proceedings.


The budget assumes an increase of 81 employees to reach a 2011 year-end projected total of 717 staff. Of the total number of new staff, 41 Registration and Inspections staff are budgeted for the broker-dealer audit oversight program, and 16 relate to the continuation of issuer audit oversight activities.


The board also approved its strategic plan for 2010–2014 to serve as the foundation for the 2011 budget, as required by the SEC’s PCAOB budget rule.


A summary of the 2011 budget will be available on the PCAOB website once it is submitted to the SEC for consideration. The PCAOB strategic plan also will be available to the public at the same time, and can be found under the “About the PCAOB” tab at pcaobus.org .


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