By Amanda Maine, J.D.
In its first action on the budget since SEC Chair Gary Gensler dismissed members of the PCAOB and replaced them with new members, the Board has approved the PCAOB’s 2022 budget, which will receive a slight increase over 2021. The budget still needs to be approved by the Securities and Exchange Commission.
Bye-bye Board. In June, Gensler announced that then-Board chairman William Duhnke III had been dismissed, while the remaining four Board members would also be departing with the Board soliciting new applications. The move had been urged by Senators Elizabeth Warren and Bernie Sanders, although SEC Commissioners Hester Peirce and Elad Roisman, along with some Republican members of Congress, criticized the action.
Budget. In September, the departing members of the Board approved rule amendments implementing Holding Foreign Companies Accountable Act. The approval of the 2022 budget is the first order of business that includes votes from new members Christina Ho (sworn in November 9) and Kara M. Stein (sworn in November 18). Duane M. DesParte, who was tapped to replace Duhnke as chairman, remains acting chairman of the PCAOB.
The 2022 budget is $310.3 million (funding 891 positions), as compared to the 2021 budget of $287.3 million (funding 859 positions). The 2022 budget includes investments to enhance the PCAOB’s oversight activities, stakeholder engagement, business processes, and IT infrastructure. The increased funding in 2022 principally reflects cost escalation for inflation, additional staff positions primarily to support inspections and standard-setting activities, and increased travel costs in anticipation of travel resuming in 2022 after being halted by the COVID-19 pandemic, according to the PCAOB.
Member Stein said of the 2022 budget, “Although I am supporting today’s proposed budget, I plan to work closely with my fellow Board members and our new Chair, Erica Williams, to reassess the PCAOB’s Strategic Plan, and determine if additional staffing and resources may be needed in the months ahead.”
Member Ho also supported the 2022 budget. In particular, she took interest in one aspect of the budget: the use of technology to identify ways to advance data-driven decision-making across the PCAOB’s programs including inspections, enforcement, and standard setting. “By leveraging PCAOB’s data as well as data made publicly available by the SEC and others, we may be able to more effectively inform standard-setting priorities and predict the risks of audit deficiencies and violations. As a result, we could use our resources more efficiently to further improve audit quality and protect investors,” she explained.