Public Company Accounting Oversight Board; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Adjusting Implementation Schedule of Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles, 76392-76393 [E6-21659]

Download as PDF 76392 Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Notices based solely on the Processor’s quarterly itemized statement audited pursuant to Processor’s annual audit. Processor shall pay or bill Participants for the audit adjustments within thirty days of completion of the annual audit. By majority vote of the Operating Committee, the Processor shall engage an independent auditor to audit the Processor’s costs or other calculation(s), the cost of which audit shall be shared equally by all Participants. The Processor agrees to cooperate fully in providing the information necessary to complete such audit. [FR Doc. E6–21708 Filed 12–19–06; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–54938; File No. PCAOB– 2006–02] Public Company Accounting Oversight Board; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Adjusting Implementation Schedule of Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles December 14, 2006. Pursuant to Section 107(b) of the Sarbanes-Oxley Act of 2002 (the ‘‘Act’’), notice is hereby given that on October 31, 2006, the Public Company Accounting Oversight Board (the ‘‘Board’’ or the ‘‘PCAOB’’) filed with the Securities and Exchange Commission (the ‘‘SEC’’ or ‘‘Commission’’) the proposed rule change described in Items I and II below, which items have been prepared by the Board. The PCAOB has designated the proposed rule change as ‘‘constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule’’ under Section 19(b)(3)(A)(i) of the Securities Exchange Act of 1934 (‘‘Exchange Act’’) (as incorporated, by reference, into Section 107(b)(4) of the Act), which renders the proposal effective upon receipt of this filing by the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. sroberts on PROD1PC70 with NOTICES I. Board’s Statement of the Terms of Substance of the Proposed Rule Change The PCAOB is filing with the SEC an adjustment of the implementation schedule for Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles. Specifically the Board will not apply Rule 3523 to tax services VerDate Aug<31>2005 20:03 Dec 19, 2006 Jkt 211001 provided on or before April 30, 2007, when those services are provided during the audit period and are completed before the professional engagement period begins. The PCAOB is not proposing any textual changes to the Rules of the PCAOB. In its filing with the Commission, the Board included statements concerning the purpose of, and basis for, the proposed rule and discussed any comments it received on the proposed rule. The text of these statements may be examined at the places specified in Item IV below. The Board has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. period.’’ 2 Accordingly, the Board has decided to adjust the implementation schedule for Rule 3523, as it applies to tax services provided during the ‘‘audit period,’’ while it revisits this aspect of the rule. Specifically the Board will not apply Rule 3523 to tax services provided on or before April 30, 2007, when those services are provided during the audit period and are completed before the professional engagement period begins.3 The implementation schedule for Rule 3523 as it applies to tax services provided during the professional engagement period remains unchanged.4 Accordingly, as of November 1, 2006, registered public accounting firms must comply with Rule 3523 as it relates to tax services provided during the professional engagement period. A. Board’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change (b) Statutory Basis The statutory basis for the proposed rule change is Title I of the Act. (a) Purpose B. Board’s Statement on Burden on Competition The Board does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. II. Board’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change On July 26, 2005, the Board adopted certain rules related to registered public accounting firms’ provision of tax services to public company audit clients. The rules were designed to address certain concerns related to auditor independence when auditors become involved in marketing or otherwise opining in favor of aggressive tax shelter schemes or in selling personal tax services to individuals who play a direct role in preparing the financial statements of public company audit clients. As part of this rulemaking, the Board adopted Rule 3523 to prohibit registered public accounting firms from providing any tax services to persons in a financial reporting oversight role at an audit client. Rule 3523 was approved by the Securities and Exchange Commission on April 19, 2006. Under the current implementation schedule set by the Board, Rule 3523 will not apply to tax services being provided pursuant to an engagement in process on April 19, 2006, provided that such services are completed on or before October 31, 2006.1 Rule 3523 applies to all tax services performed for persons in a financial reporting oversight role during the ‘‘audit and professional engagement period.’’ The Board intends to revisit the application of Rule 3523 to tax services provided during the period before a registered public accounting firm becomes auditor of record for an audit client—that is, during only the ‘‘audit 1 PCAOB Release No. 2006–001 (March 28, 2006), at 2–3. PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 C. Board’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others The Board did not solicit or receive written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Exchange Act (as incorporated, by reference, into Section 107(b)(4) of the Act), in that the proposed rule change constitutes a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the 2 Consistent with the SEC’s independence rules, 17 CFR 210.2–01(f)(5), the phrase ‘‘audit and professional engagement period’’ is defined to include two discrete periods of time. The ‘‘audit period’’ is the period covered by any financial statements being audited or reviewed. Rule 3501(a)(iii)(1). The ‘‘professional engagement period’’ is the period beginning when the accounting firm either signs the initial engagement letter or begins audit procedures and ends when the audit client or the accounting firm notifies the SEC that the client is no longer that firm’s audit client. Rule 3501(a)(iii)(2). 3 This will apply whether there is an engagement in process on April 19, 2006 or not. 4 PCAOB Release No. 2006–001 (March 28, 2006), at 3. E:\FR\FM\20DEN1.SGM 20DEN1 76393 Federal Register / Vol. 71, No. 244 / Wednesday, December 20, 2006 / Notices PCAOB. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Exchange Act. 2006–02 and should be submitted on or before January 10, 2007. IV. Solicitation of Comments SECURITIES AND EXCHANGE COMMISSION Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule is consistent with the requirements of Title I of the Act. Comments may be submitted by any of the following methods: Electronic Comments sroberts on PROD1PC70 with NOTICES • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/pcaob.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number PCAOB–2006–02 on the subject line. By the Commission. Nancy M. Morris, Secretary. [FR Doc. E6–21659 Filed 12–19–06; 8:45 am] Chicago Board Options Exchange, Incorporated BILLING CODE 8011–01–P [Release No. 34–54926; File No. SR–CBOE– 2006–62] Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing of a Proposed Rule Change and Amendment No. 1 Thereto Amending its Index Obvious Error Rule December 13, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on July 7, 2006, the Chicago Board Options Exchange, Incorporated (‘‘CBOE’’ or ‘‘Exchange’’) filed with the Securities Paper Comments and Exchange Commission • Send paper comments in triplicate (‘‘Commission’’) the proposed rule to Nancy M. Morris, Secretary, change as described in Items I, II, and Securities and Exchange Commission, III below, which Items have been 100 F Street, NE., Washingtion, DC substantially prepared by the Exchange. 20549–1090. On October 30, 2006, the CBOE All submissions should refer to File submitted Amendment No. 1 to the Number PCAOB–2006–02. This file proposed rule change.3 The Commission number should be included on the is publishing this notice to solicit subject line if e-mail is used. To help the comments on the proposed rule change, Commission process and review your as amended, from interested persons. comments more efficiently, please use I. Self-Regulatory Organization’s only one method. The Commission will Statement of the Terms of Substance of post all comments on the Commission’s the Proposed Rule Change Internet Web site (http://www.sec.gov/ The Exchange proposes to amend rules/pcaob.shtml). Copies of the CBOE Rule 24.16 (‘‘Rule’’), which is the submission, all subsequent Exchange’s rule applicable to the amendments, all written statements nullification and adjustment of with respect to the proposed rule transactions in index options, options change that are filed with the on exchange-traded funds (‘‘ETFs’’), and Commission, and all written options on HOLDing Company communications relating to the Depository ReceiptS (‘‘HOLDRS’’). The proposed rule change between the Commission and any person, other than Exchange is proposing to amend the Rule in order to: (i) re-define what those that may be withheld from the constitutes an ‘‘obvious price error;’’ (ii) public in accordance with the provide for a Market-Maker to Marketprovisions of 5 U.S.C. 552, will be Maker adjustment of obvious price available for inspection and copying in errors (currently such erroneous the Commission’s Public Reference Room. Copies of such filing also will be transactions are subject to nullification); (iii) eliminate the nullification and available for inspection and copying at adjustments provisions for erroneous the principal office of the PCAOB. All quantity errors; and (iv) make various comments received will be posted without change; we do not edit personal 1 15 U.S.C. 78s(b)(1). identifying information from 2 17 CFR 240.19b–4. submissions. You should submit only 3 Amendment No. 1 (‘‘Amendment No. 1’’) information that you wish to make supersedes and replaces the original filing in its available publicly. All submissions entirety. The substance of Amendment No. 1 is incorporated into this notice. should refer to File Number PCAOB– VerDate Aug<31>2005 20:03 Dec 19, 2006 Jkt 211001 PO 00000 Frm 00123 Fmt 4703 non-substantive changes to the text of the Rule. Below is the text of the proposed rule change. Proposed new language is in italics and proposed deletions are in [brackets]. Sfmt 4703 Rules * * * * * Rule 24.16. Nullification and Adjustment of [Index Option] Transactions in Index Options, Options on ETFs and Options on HOLDRS RULE 24.16. This Rule only governs the nullification and adjustment of transactions involving index options and options on ETFs or HOLDRS[s]. Rule 6.25 governs the nullification and adjustment of transactions involving equity options. Paragraphs (a)(1), [(2),] ([6]5) and ([7]6) of this Rule have no applicability to trades executed in open outcry. (a) Trades Subject to Review A member or person associated with a member may have a trade adjusted or nullified, as provided herein, if, in addition to satisfying the procedural requirements of paragraph (b) below, one of the following conditions is satisfied: (1) Obvious Price Error: An obvious price[ing] error will be deemed to have occurred when the execution price of a transaction is above or below the fair market value of the option by at least a prescribed minimum error amount. For series trading with normal bid-ask differentials as established in Rule 8.7(b)(iv), the prescribed minimum error amount shall be: [(a) the greater of $0.10 or 10% for options trading under $2.50; (b) 10% for options trading at or above $2.50 and under $5; or (c) $0.50 for options trading at $5 or higher.] Fair market value Below $2 ....................................... $2 to $5 ........................................ Above $5 to $10 ........................... Above $10 to $20 ......................... Above $20 .................................... Minimum error amount $0.125 $0.20 $0.25 $0.40 $0.50 For series trading with bid-ask differentials that are [greater than]a multiple of the widths established in Rule 8.7(b)(iv), the prescribed minimum error amount shall have the same multiple applied to the minimum error amount prescribed above[be: (a) the greater of $0.20 or 20% for options trading under $2.50; (b) 20% for options trading at or above $2.50 and under $5; E:\FR\FM\20DEN1.SGM 20DEN1

Agencies

[Federal Register Volume 71, Number 244 (Wednesday, December 20, 2006)]
[Notices]
[Pages 76392-76393]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-21659]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54938; File No. PCAOB-2006-02]


Public Company Accounting Oversight Board; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Adjusting 
Implementation Schedule of Rule 3523, Tax Services for Persons in 
Financial Reporting Oversight Roles

December 14, 2006.
    Pursuant to Section 107(b) of the Sarbanes-Oxley Act of 2002 (the 
``Act''), notice is hereby given that on October 31, 2006, the Public 
Company Accounting Oversight Board (the ``Board'' or the ``PCAOB'') 
filed with the Securities and Exchange Commission (the ``SEC'' or 
``Commission'') the proposed rule change described in Items I and II 
below, which items have been prepared by the Board. The PCAOB has 
designated the proposed rule change as ``constituting a stated policy, 
practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule'' under Section 
19(b)(3)(A)(i) of the Securities Exchange Act of 1934 (``Exchange 
Act'') (as incorporated, by reference, into Section 107(b)(4) of the 
Act), which renders the proposal effective upon receipt of this filing 
by the Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.

I. Board's Statement of the Terms of Substance of the Proposed Rule 
Change

    The PCAOB is filing with the SEC an adjustment of the 
implementation schedule for Rule 3523, Tax Services for Persons in 
Financial Reporting Oversight Roles. Specifically the Board will not 
apply Rule 3523 to tax services provided on or before April 30, 2007, 
when those services are provided during the audit period and are 
completed before the professional engagement period begins. The PCAOB 
is not proposing any textual changes to the Rules of the PCAOB.

II. Board's Statement of the Purpose of, and Statutory Basis for, the 
Proposed Rule Change

    In its filing with the Commission, the Board included statements 
concerning the purpose of, and basis for, the proposed rule and 
discussed any comments it received on the proposed rule. The text of 
these statements may be examined at the places specified in Item IV 
below. The Board has prepared summaries, set forth in sections A, B, 
and C below, of the most significant aspects of such statements.

A. Board's Statement of the Purpose of, and Statutory Basis for, the 
Proposed Rule Change

(a) Purpose
    On July 26, 2005, the Board adopted certain rules related to 
registered public accounting firms' provision of tax services to public 
company audit clients. The rules were designed to address certain 
concerns related to auditor independence when auditors become involved 
in marketing or otherwise opining in favor of aggressive tax shelter 
schemes or in selling personal tax services to individuals who play a 
direct role in preparing the financial statements of public company 
audit clients. As part of this rulemaking, the Board adopted Rule 3523 
to prohibit registered public accounting firms from providing any tax 
services to persons in a financial reporting oversight role at an audit 
client. Rule 3523 was approved by the Securities and Exchange 
Commission on April 19, 2006. Under the current implementation schedule 
set by the Board, Rule 3523 will not apply to tax services being 
provided pursuant to an engagement in process on April 19, 2006, 
provided that such services are completed on or before October 31, 
2006.\1\
---------------------------------------------------------------------------

    \1\ PCAOB Release No. 2006-001 (March 28, 2006), at 2-3.
---------------------------------------------------------------------------

    Rule 3523 applies to all tax services performed for persons in a 
financial reporting oversight role during the ``audit and professional 
engagement period.'' The Board intends to revisit the application of 
Rule 3523 to tax services provided during the period before a 
registered public accounting firm becomes auditor of record for an 
audit client--that is, during only the ``audit period.'' \2\ 
Accordingly, the Board has decided to adjust the implementation 
schedule for Rule 3523, as it applies to tax services provided during 
the ``audit period,'' while it revisits this aspect of the rule. 
Specifically the Board will not apply Rule 3523 to tax services 
provided on or before April 30, 2007, when those services are provided 
during the audit period and are completed before the professional 
engagement period begins.\3\
---------------------------------------------------------------------------

    \2\ Consistent with the SEC's independence rules, 17 CFR 210.2-
01(f)(5), the phrase ``audit and professional engagement period'' is 
defined to include two discrete periods of time. The ``audit 
period'' is the period covered by any financial statements being 
audited or reviewed. Rule 3501(a)(iii)(1). The ``professional 
engagement period'' is the period beginning when the accounting firm 
either signs the initial engagement letter or begins audit 
procedures and ends when the audit client or the accounting firm 
notifies the SEC that the client is no longer that firm's audit 
client. Rule 3501(a)(iii)(2).
    \3\ This will apply whether there is an engagement in process on 
April 19, 2006 or not.
---------------------------------------------------------------------------

    The implementation schedule for Rule 3523 as it applies to tax 
services provided during the professional engagement period remains 
unchanged.\4\ Accordingly, as of November 1, 2006, registered public 
accounting firms must comply with Rule 3523 as it relates to tax 
services provided during the professional engagement period.
---------------------------------------------------------------------------

    \4\ PCAOB Release No. 2006-001 (March 28, 2006), at 3.
---------------------------------------------------------------------------

(b) Statutory Basis
    The statutory basis for the proposed rule change is Title I of the 
Act.

B. Board's Statement on Burden on Competition

    The Board does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act.

C. Board's Statement on Comments on the Proposed Rule Change Received 
From Members, Participants or Others

    The Board did not solicit or receive written comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Exchange Act (as incorporated, by reference, into 
Section 107(b)(4) of the Act), in that the proposed rule change 
constitutes a stated policy, practice, or interpretation with respect 
to the meaning, administration, or enforcement of an existing rule of 
the

[[Page 76393]]

PCAOB. At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate such rule change if it 
appears to the Commission that such action is necessary or appropriate 
in the public interest, for the protection of investors, or otherwise 
in furtherance of the purposes of the Exchange Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
is consistent with the requirements of Title I of the Act. Comments may 
be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/pcaob.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number PCAOB-2006-02 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washingtion, DC 20549-1090.

All submissions should refer to File Number PCAOB-2006-02. This file 
number should be included on the subject line if e-mail is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/
pcaob.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for inspection and 
copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of the PCAOB. All comments received will be posted 
without change; we do not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number PCAOB-
2006-02 and should be submitted on or before January 10, 2007.

    By the Commission.
Nancy M. Morris,
Secretary.
 [FR Doc. E6-21659 Filed 12-19-06; 8:45 am]
BILLING CODE 8011-01-P