DATE: Nov. 28, 2012
SPEAKER(S): Lewis H. Ferguson, Board Member
EVENT: PCAOB Open Board Meeting LOCATION: Washington, D.C.
I support the Board's Budget for 2013 and the accompanying Strategic Plan for 2012-2016. The budget of $245.6 million represents an increase of approximately 8 percent over prior year. This increase is driven primarily by personnel and compensation factors and represents a projected work force of 839 up from a projected 781 staff members at the end of 2012. Most of the projected new hires will be assigned to the Division of Registration and Inspections.
In 2010, in the Dodd-Frank Act, Congress gave the PCAOB jurisdiction over the auditors of SEC registered brokers and dealers. More than 500 new auditing firms registered with the PCAOB following the enactment of the new statute and in response the PCAOB has had to hire additional inspectors skilled in auditing brokers and dealers. In addition, the PCAOB has entered into cooperative information-sharing agreements with a number of additional countries, particularly in the European Community, and as a result will be substantially increasing the number of international audit inspections. These expanded responsibilities require more people.
That said, it is my hope that with this budget, the PCAOB should now have a full or nearly full complement of resources to accomplish the tasks it has been assigned by Congress. Starting from scratch in 2002, it has taken over ten years to hire the full staff and build the administrative and operational structures that are required to fulfill the mandate set forth in the Sarbanes-Oxley Act. As the Board's Strategic Plan for 2012-2016 makes clear, the PCAOB's emphasis in the near future will be to refine its processes and use the knowledge and the data gathered in the inspection process through its Office of Research and Analysis to develop a deeper understanding of the drivers of audit quality and to communicate our findings more effectively to the audit firms we regulate and to the public.
The Strategic Plan sets forth six near term priorities for the Board, all designed to improve the timeliness and usefulness of the Board's core functions of audit inspections and standard setting. A core theme that runs through these priorities is a focus on more timely, clearer and more meaningful communication of the Board's views and findings to those constituencies who are interested in the Board's work. One priority that is particularly noteworthy is the goal to enhance the PCAOB's outreach to and interaction with audit committees. Audit committees are the employers of the auditors the PCAOB inspects and regulates and there is a natural community of interest between the PCAOB and these committees. We share a common interest in investor protection and in making sure that audit quality is as good as it can possibly be and enhanced communications between the PCAOB and audit committees should serve both goals.