PCAOB Registration Requirements
PCAOB Rule 2100 requires that each public accounting firm (including foreign firms) must register with the PCAOB if the firm:
(a) prepares or issues any audit report with respect to any issuer (i), or
(b) plays a substantial role (ii) in the preparation or furnishing of an audit report with respect to any issuer.
The following resources are available to assist in determining whether PCAOB registration is necessary:
- PCAOB Registration and Reporting Rules
- PCAOB Auditing Standard No. 1 - References in Auditors' Reports to the Standards of the PCAOB
- PCAOB Staff Questions & Answers - Audits of Financial Statements of Non-Issuers Performed Pursuant to the Standards of the PCAOB
Definitions of Terms Issuer and Substantial Role
(i) PCAOB Rule 1001(i)(iii) - Definition of Issuer - The term "issuer" means an issuer (as defined in Section 3 of the Exchange Act), the securities of which are registered under Section 12 of that Act, or that is required to file reports under Section 15(d) of that Act, or that files or has filed a registration statement that has not yet become effective under the Securities Act of 1933, and that it has not withdrawn.
(ii) PCAOB Rule 1001(p)(ii) - Definition of Substantial Role - The phrase "play a substantial role in the preparation or furnishing of an audit report" means –
(1) to perform material services that a public accounting firm uses or relies on in issuing all or part of its
audit report with respect to any issuer, or
(2) to perform the majority of the audit procedures with respect to a subsidiary or component of any issuer the
assets or revenues of which constitute 20% or more of the consolidated assets or revenues of such
issuer necessary for the principal accountant to issue an audit report on the issuer.
Note 2: For purposes of paragraph (2) of this definition, the phrase "subsidiary or component" is meant to include any subsidiary, division, branch, office or other component of an issuer, regardless of its form of organization and/or control relationship with the issuer.
Note 3: For purposes of determining "20% or more of the consolidated assets or revenues" under paragraph (2) of this Rule, this determination should be made at the beginning of the issuer's fiscal year using prior year information and should be made only once during the issuer's fiscal year.
II. Audits of Non-Public Broker-Dealers
Section 17(e) of the Securities Exchange Act of 1934 (as amended by SOX) requires that financial statements of non-public broker-dealers filed with the SEC for fiscal years ending after December 31, 2008 to be certified by a PCAOB registered public accounting firm. On July 21, 2010, Section 982 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) amended certain provisions of SOX to provide the PCAOB with oversight authority over auditors of brokers and dealers including the authority to subject those auditors to the PCAOB’s oversight regime of inspections and enforcement. The Board is currently in the process of implementing its broker-dealer auditor oversight authority. The following resources may assist auditors of non-public broker-dealers with questions regarding PCAOB registration:
- PCAOB Registration Process for Broker-Dealer Auditors
- PCAOB Staff Q&A on Registration of Broker-Dealer Auditors
- SEC Staff FAQ on the PCAOB Registration of Non-Public Broker-Dealers
The SEC amended its custody and recordkeeping rules under the Investment Advisers Act of 1940 to require an annual surprise examination and verification of investment advisers with custody of client assets by an independent public accountant registered with, and subject to inspection by the PCAOB. Please refer to the following resources:
- SEC Staff Responses to Questions About the Custody Rule
- Interpretive Release No. IA-2969, Commission Guidance Regarding Independent Public Accountant Engagements Performed Pursuant to Rule 206(4)-2 Under the Investment Advisers Act of 1940
- Small Entity Compliance Guide, Custody of Funds or Securities of Clients by Investment Advisers
IV. Other PCAOB Registration Information
For further information regarding PCAOB registration: