SEC Approves PCAOB’s 2019 Budget
One month after the new Public Company Accounting Oversight Board (“PCAOB”) leadership approved a budget increase for 2019 , the Securities and Exchange Commission (“SEC”) published a release approving the PCAOB budget. Release No. 33-10592, Order Approving Public Company Accounting Oversight Board Budget and Annual Accounting Support Fee for Calendar Year 2019, gives the PCAOB the ability to have a $273.7 million budget this year. This year’s budget is a 5.3 increase from 2018 ($259.9 million). Release No. 33-10592 also orders the PCAOB to schedule monthly meetings during 2019 with SEC staff to provide updates on initiatives that could impact the 2020 budget. Additionally this year, the SEC PCAOB must continue providing the SEC. Read More.
SEC Compliance Office Announces Examination Priorities for 2019
The Securities and Exchange Commission’s (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) has announced the following examination priorities for 2019: Digital assets Cybersecurity Compliance and risk at registrants responsible for critical market infrastructure; Matters of importance to retail investors Financial Industry Regulatory Authority, Inc. (“FINRA”) and Municipal Securities Rulemaking Board (“MSRB”) operations Anti-money laundering programs OCIE plans to review digital assets because of the rapid growth of the cryptocurrency market and the potential risks the market may present investors. Digital asset market participants (e.g., broker-dealers, investment advisors) are also on the rise. OCIE plans to continue monitoring how digital. Read More.
Proposed Volcker Rule Amendment Excludes Community Banks
Five financial regulators have issued a proposal to omit certain community banks from the Volcker Rule, which limits proprietary trading. The Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Federal Reserve, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission propose excluding from the Volcker Rule community banks possessing equal or less than $10 billion in total consolidated assets and trading assets, and liabilities equal or less than five percent of total consolidated assets. Issued as Release No. BHCA-5, Proposed Revisions to Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and. Read More.
Investor Advocate Says SEC Gave Insufficient Analysis on Expanding Small Company Definition
An investor advocate with the Securities and Exchange Commission (“SEC”) believes the agency failed in its research efforts when analyzing the expansion of its small company definition. In a report to Congress issued on December 20, 2018, Rick Fleming said the SEC should have conducted further analysis before adopting Release No. 33-10513, Amendments to Smaller Reporting Company Definition. Release No. 33-10513 raises the public float threshold for smaller reporting companies from $75 million to $250 million, which allows nearly 1,000 companies to qualify for the disclosure requirements. Additionally, a company without a public float or with a public float under. Read More.
PCAOB Releases Consistent Approach to Auditing Accounting Estimates
In its first standard-setting move since undergoing a complete leadership change early last year, the Public Company Accounting Oversight Board (“PCAOB”) unanimously approved a standard to improve audits of accounting estimates. Issued as Release No. 2018-005, Auditing Accounting Estimates, Including Fair Value Measurements, the standard provides auditors a more consistent approach to auditing accounting estimates. Previously, auditors used three standards to audit estimates: Auditing Standard (“AS”) 2501, Auditing Accounting Estimates; AS 2502, Auditing Fair Value Measurements and Disclosures; and AS 2503, Auditing Derivative Instruments, Hedging Activities, Investments in Securities. While the standards employ a common approach to testing estimates, they differ in explaining the. Read More.
PCAOB Approves Standard for Auditor’s Use of Specialists
Last month, the Public Company Accounting Oversight Board (“PCAOB”) published a final standard aimed to strengthen the requirements for an auditor’s use of specialists. Release No. 2018-006, Amendments to Auditing Standards for Auditor’s Use of the Work of Specialists, improves how an auditor uses the work of specialists and reinforces the provisions necessary for reviewing the work of an organization’s specialist. The revised standard also aligns with the PCAOB’s risk assessment standards. Specifically, an auditor must now test the suitability of an organization’s data, as well as the significant assumptions and methods applied. PCAOB member Duane DesParte noted that the amendments. Read More.