Mr. Chairman, I commend you for initiating these public meetings and for making the enhancement of auditor independence, objectivity and professional skepticism a top priority for the Board. Having such a distinguished group of experts to talk about these issues is testament to the importance of this topic to financial markets, capital formation, and to investor protection.
The drafters of the Sarbanes-Oxley Act recognized that independence is the bedrock upon which audit quality is built and included several reforms designed to enhance independence. For example, among other things, the responsibility for selecting and overseeing external auditors was taken from management of listed companies and given to audit committees, auditors were banned from providing numerous non-audit services to their audit clients, and audit firms were forced to rotate lead engagement partners every five years.
However, even with these important reforms, the inspection findings of the Board, as well as those of our international counterparts, indicate that more needs to be done. In addition to the findings of our PCAOB inspectors, regulators in, for example, Australia, Canada, Germany, the Netherlands, Singapore and the United Kingdom have cited deficiencies in professional skepticism as a cause of persistent problems at audit firms.
And just as we in the United States are considering ways to improve auditor independence, objectivity and professional skepticism, so are many of our international counterparts.
Investor groups and leaders of the profession alike recognize that the status quo is not an option.
The Board has received over six hundred [628] comment letters in response to our concept release. In addition to mandatory rotation, suggestions have included, for example: mandatory retendering; audit only firms; enhancing auditor training; joint audits; strengthening audit committees; enhancing independent standards and more targeted PCAOB inspections.
We have a responsibility to explore all options and carefully consider the intended and unintended consequences of each option, including the costs of each.
It is a particular pleasure to welcome Chairman Volcker, Chuck Bowsher and Richard Breeden. And, later, Damon Silvers, Harvey Pitt, John Biggs, Rod Hills, and Arthur Levitt. 2012 marks the 10th anniversary of the passage of the Sarbanes-Oxley Act, and it was 10 years ago last month, that each of you testified before the Senate Banking Committee and provided such valuable input to the Committee.
I look forward to hearing your comments and suggestions, as well as the remarks of all those who will participate in these roundtables over the next two days.