Under the Sarbanes-Oxley Act of 2002 and the PCAOB's rules, U.S. public accounting firms must be registered with the board by Oct. 22, 2003, to continue preparing or issuing audit reports on U.S. public companies or to play a substantial role in such audits. Accounting firms will pay the costs for the registration process.

The SEC also ruled that foreign accounting firms that "play a substantial role in the preparation or issuance of audit reports" must also register, although under different guidelines. They have an additional six months to register and will not be required to submit information that is proved to conflict with non-U.S. law.

"Registration is the underpinning of the board's duties to oversee and inspect public accounting firms, as well as the board's duty to enforce the auditing standards that will help restore public confidence in financial reporting," PCAOB Chairman William J. McDonough said.

PCAOB chairman Charles Niemier told business journalists in Washington Thursday that the board is willing to take dramatic action against accounting firms if it undercovers broad systemic wrongdoing, the Wall Street Journal reported. This could include stripping firms of their ability to audit public companies.

The SEC's order approving the registration rules is available at http://www.sec.gov/rules/pcaob.shtml.

See also:

• PCAOB Votes for Foreign Registration
• Accounting Panel, SEC Back Registry for Foreign Auditors
• SEC Gets Tough with NYSE-listed Foreign Firms