The Public Company Accounting Oversight Board is seeking permission from the Securities and Exchange Commission to raise the 2009 PCAOB accounting support fee by 3.7 percent, from $151.8 million to $157.4 million.
The move would increase the PCAOB’s previously established 2009 accounting support fee, which the SEC approved in December 2008. Under the Sarbanes-Oxley Act, the accounting support fee is the amount annually assessed to public companies and other issuers, in proportion to their market capitalization, to fund the board’s activities. The board would not use the additional fee income until a supplemental budget is approved.
In a letter to the SEC, the PCAOB explained that its accounting support fee is designed to equal its budget, which includes a working capital reserve to cover expenses anticipated in the first five months of the following calendar year, less any remaining funds from the prior year. Thus, even though the PCAOB’s 2009 budget is $157.6 million, its 2009 accounting support fee is $151.8 million.
The board said that the increase is needed because the PCAOB is scheduled to issue invoices for the fee around April 15. “The PCAOB cannot delay such invoices pending resolution of the issues surrounding the need for and content of a supplemental budget because its working capital reserve only covers its projected cash needs for the first five months of 2009,” it said. “Moreover, billing issuers a second time during 2009 to cover the supplemental budget would, at a minimum, present considerable operational challenges and additional costs for the PCAOB.”
The board also said that increasing the 2009 accounting support fee will help the PCAOB and SEC prepare for the risk of a decrease in the support fee collection rate for 2009. It noted it has historically enjoyed a high collection rate. However, it conceded it may experience a significantly different collection rate in 2009.
“Among other things, since the allocation of the accounting support fee is weighted toward companies with greater average monthly market capitalizations, failure of even a few large companies to pay their assessments could have a significant impact on the PCAOB’s collection rate,” it warned.