Reuters: Regulatory News: UPDATE 2-US audit watchdog bewildered by sequestration inclusion

Reuters: Regulatory News Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 2-US audit watchdog bewildered by sequestration inclusion Feb 13th 2013, 20:01 Wed Feb 13, 2013 3:01pm EST By Sarah N. Lynch WASHINGTON Feb 13 (Reuters) - The top U.S. audit watchdog said the federal government is "simply wrong" in its decision to include the non-profit corporation on a list of agencies facing steep automatic budget cuts if Congress fails to act. "We are not a part of the federal government," Public Company Accounting Oversight Board Chairman James Doty told reporters on Wednesday. The government's position "is simply wrong and flies in the face of clear statutory language," he said on the sidelines on an appearance before the U.S. Securities and Exchange Commission to discuss the PCAOB's 2013 budget needs. Doty said it might be a good idea if the PCAOB sought a legal review of the matter from the Justice Department's Office of Legal Counsel, though nothing has been decided. The White House and its Office of Management and Budget did not respond to requests for comment. He added that the PCAOB in the interim will come up with a contingency plan. The plan, however, would not include furloughs or cuts to staff, who he called the organization's "life blood." The PCAOB is funded through fees from public companies and broker-dealers. But it is listed in the federal budget each year, and the SEC must vote to approve its budget annually. This year, the SEC approved a $245.6 million budget for the PCAOB, an increase of about 8 percent from the 2012 budget of $227.7 million. In preliminary estimates last year of how sequestration would affect each government agency, the Office of Management and Budget said the SEC's $1.321-billion budget could be facing a cut of $108 million. Also included in that document are some organizations that do not receive congressional appropriations. The PCAOB is listed as facing a potential $18 million cut, while the Securities Investor Protection Corp (SIPC), which is also funded through industry fees, is listed for a potential $23 million cut. The budget increase approved by the SEC for the PCAOB's 2013 needs is nearly the same amount on the sequestration chopping block. Elisse Walter, the SEC's chairman, said her agency is aware of the potential impacts to the PCAOB and is prepared to work with the organization if the looming March 1 cuts go into effect. The PCAOB was created by the 2002 Sarbanes-Oxley Act in response to accounting scandals at companies like Enron. It regulates auditors of public companies and broker-dealers, conducting routine inspections, taking enforcement actions when needed, and setting auditing standards for the industry. It is still in the early stages of carrying out inspections of broker-dealer auditors, a new authority it won in the 2010 Dodd-Frank Wall Street reform law. It is also involved in talks with Chinese regulators over a failure by Chinese audit firms to turn over work papers to the PCAOB and the SEC. QUIRK IN SEQUESTRATION LAW The sequestration law was passed in response to an impasse over raising the nation's borrowing limit as Democrats and Republicans wrangled over how to address the nation's budget deficit. The law set a deadline for across-the-board spending cuts unless a deal on the budget is reached. Stephen Harbeck, SIPC's president and chief executive, called the sequestration legislation a "square peg in a round hole" type of problem. SIPC, which was created by Congress to help customers of failed brokerages recover their money, is funded by industry fees. Though it has a $2.5 billion line of credit available from the federal government, it has never tapped it. "The clear intent is to capture government monies, and make sure they don't get used by the government. We don't do that," he told Reuters in an interview late on Tuesday. "Nevertheless, under some readings of the sequestration legislation, it seems that if you were set up by the government, you have to do something about this." He said the SIPC is having discussions about the matter internally. "I am sure that ... if this becomes necessary to deal with, rational minds will prevail and we'll find a way to continue our operations," Harbeck added. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions