Washington, DC, July 29, 2008 – The Public Company Accounting Oversight Board today adopted rules and a corresponding form that govern when a firm would be allowed to succeed to the registration status of a predecessor firm following a merger or other change in the registered firm’s legal form.
Under Section 102(a) of the Sarbanes-Oxley Act of 2002 and PCAOB rules, a public accounting firm must be registered with the PCAOB in order to prepare or issue audit reports for public companies or to play a substantial role in the preparation or furnishing of such audit reports. To become registered, a public accounting firm files an application for registration on PCAOB Form 1, which the Board may approve or disapprove. The rules and form (PCAOB Form 4) adopted today identify the circumstances in which the registration status of a registered firm may continue in effect even after the firm’s legal form has changed or the firm has combined with another firm, without the new legal entity needing to apply for registration on Form 1.
PCAOB Chairman Mark Olson said, "Today’s action will allow for registered firms -- in appropriate and well defined circumstances – to provide audit services without a break in their PCAOB registration status when there has been some change in their legal form. The rules would provide flexibility that is important given the serious implications of a firm operating without registration.”
Succession through the Form 4 mechanism is an option available to a firm where the change involving the firm satisfies specified criteria. When those criteria are not satisfied, registration would remain available only through the Form 1 application process.
The Board will submit the rules to the Securities and Exchange Commission for approval. The rules will take effect 60 days after Commission approval.
The Board’s release adopting the rules, along with the text of the rules and the instructions to Form 4 can be found on the Board’s Web site, www.pcaobus.org, on the Rulemaking Docket under Rules (Docket Matter No. 020). An archive of the Webcast of the Board’s Open Meeting will be available on the Board's Web site, on the Webcasts page.
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of 2002, to oversee the auditors of public companies in order to protect
the interests of investors and further the public interest in the
preparation of informative, fair, and independent audit