TheCorporateCounsel.net

March 4, 2003

Thanks to Mike Holliday –

Thanks to Mike Holliday – our roving friend and reporter – the following are some of the actions taken by the Public Company Accounting Oversight Board at its meeting today:

1. Approved putting out for comment proposed registration rules and forms for public auditing firms to register. Comments due by 5 p.m. on March 31st. After the comment period, the PCAOB has to approve the rules and forms and submit to the SEC, which will put out the rules for comment. The PCAOB time schedule is to send the rules and forms to the SEC by mid-April, with applications from auditing firms due to be filed by early September and firms registered by the end of October.

2. The PCAOB plans to put out proposals for allocation, assessment and collection of fees from issuers next week, with final rules to the SEC by mid-April. They plan to be able to send bills to issuers in mid-to-late spring.

3. The PCAOB plans to adopt transitional standards on auditing, quality control and independence in mid-April, and to announce standard setting procedures in April.

4. Non-US auditing firms – including non-US firms that play a substantial part in preparing audit reports even if the firm does not issue the report – are not exempt from the registration process.

5. The PCAOB plans to hold a roundtable the week of March 17, they mentioned Friday, March 21, to consider registration of non-US auditing firms and how the PCAOB should exercise its authority over non-US firms. They want to invite participation by US and non- US auditing firms, investors and financial regulatory authorities. There will be a separate release on this with a list of questions attached.

Although most of this regulation directly affects the auditing firms and not public companies, there are a few issues for companies to follow – in addition to the fees public companies will have to pay. The PCAOB will be collecting data, particularly in audit firm investigations, that may include some public company client information.

Also, SOX 105 specifically authorizes the Board to establish rules to request testimony of, and production of any document in the possession of, any other person including any client of an auditing firm, and to seek issuance by the SEC of a subpoena to require the testimony of or production of any document in the possession of any person including any client, with relevancy and materiality standards. Public companies will have an interest in how their confidential and proprietary information will be protected.

The SEC also announced the details of its selection process for head of the PCAOB – it’s at http://www.sec.gov/news/press/2003-28.htm.