SEC Gives PCAOB Substantial Budget Increase

The SEC adopted the 2024 annual budget for the Public Company Accounting Oversight Board ("PCAOB") along with the related annual accounting support fee.

According to the SEC, the PCAOB's $385 million annual budget for 2024 equates to "a modest two percent increase in headcount." The accounting support fee is $358.8 million, of which $331 million will be assessed on public company issuers and $27.8 million will be assessed on registered broker-dealers.

The SEC said that the budget reflects:

• the PCAOB's global oversight role, especially as to Chinese audit firms;
• an increase of 20 new positions, with a focus on restoring the Division of Registrations and Inspections to its 2017 headcount;
• the need to identify and submit assessments for operational efficiency in the 2025 budget cycle;
• the need to coordinate SEC and PCAOB directives as to monthly meetings, quarterly updates and Commissioner discussions; and
• the sequestration impact on the PCAOB's budget.

SEC Commissioner Statements

Chair Gary Gensler supported the 2024 budget emphasizing its critical role in investor protection and capital formation.

Commissioner Hester M. Peirce stated that the budget growth was "[u]nsustainable." She said that the latest budget represents a 10 percent increase which follows a 13 percent increase the previous year. Ms. Peirce raised several questions about the PCAOB's oversight process, deficiency rates, the reliance on enforcement statistics and the potential negative impact of an ambitious standard-setting agenda on audit quality.

Commissioner Caroline A. Crenshaw acknowledged challenges to audit quality, citing deficiencies in 40 percent of audits reviewed in 2022. She said that the budget addresses more appropriate staffing and funding. She reasoned that the increase in the budget was a product of 21 years of progress, highlighting the PCAOB's commitment to inspections, enforcement,and crucial standards while maximizing efficiency in the use of accounting support fees.

Commissioner Jaime Lizárraga raised concerns about rising audit deficiencies, but said the budget reflected the PCAOB's commitment to investor protection and the public interest.