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August 23, 2009

US regulator endorses plans for audit firm annual reports

Registered US audit firms will be required
to produce publicly available annual reports and routinely reveal
details on legal proceedings, administration changes and other
important events, according to new Public Company Accounting
Oversight Board (PCAOB) rules.

The reporting requirements were passed by
national regulator Securities Exchange Commission (SEC) in an
attempt to improve the transparency of firms.

In the EU, firms are required to produce
transparency reports, which provide details about how much a firm
earns each year, its clients and personnel details.

The first set of US rules will come into
effect on 12 October 2009. These relate to PCAOB Form 3 reports,
which cover issues from administrative matters, such as changes in
a firm's contact information to more substantive matters,
including certain types of legal proceedings against a firm or its
personnel. Form 3 reports must be produced within 30 days of an
event occurring.

Firms will also have to produce annual
reports, with the first of these due 30 June 2010.

All firms that are registered with the PCAOB
as of 31 March of a particular year must, by 30 June of that year,
file an annual report covering the 12-month period ending 31
March.

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Annual reports will contain information on
audit reports issued, disciplinary histories of new personnel, and
information on fees billed to issuer audit clients for various
categories of services.

“Adoption of these rules will put into effect
an important provision of the Sarbanes-Oxley Act and increase
transparency regarding firms registered with the PCAOB, including
auditors of public companies and broker-dealers,” said PCAOB acting
chairman Daniel Goelzer.

Another new rule allows for a firm to succeed
to the registration status of a predecessor firm without a break in
that registration status and without the need to file a new
registration application.

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