Good morning. This is an open meeting of the U.S. Securities and Exchange Commission on Feb. 13, 2013.
Today, the Commission will consider whether to approve the proposed 2013 budget and accounting support fee for the Public Company Accounting Oversight Board. Under the Sarbanes-Oxley Act, which created the PCAOB, the Board´s annual budget and support fee must be approved by the Commission.
The PCAOB is empowered with the authority to oversee the audits and auditors of U.S. public companies´ financial statements. And with the passage of the Dodd-Frank Act, it has the explicit authority to oversee the audits and auditors of broker-dealers´ financial statements.
Since its creation 10 years ago, the PCAOB has grown into an important regulatory body with a significant investor protection role. More than 2,300 accounting firms are registered with the PCAOB, and about 900 of these firms are located in other countries. One of the PCAOB´s most important mandates is to conduct inspections of accounting firms registered with the Board. Since 2002, the Board has conducted numerous inspections in the U.S. and abroad involving thousands of audits of U.S. public companies.
While the PCAOB has experienced challenges performing inspections in certain non-U.S. jurisdictions, I´d like to acknowledge the remarkable progress the Board has made over the past year in advancing new cooperative agreements and developing relationships with non-U.S. regulators. These agreements and relationships have, among other things, enabled advancement of inspections of audits around the globe.
In addition to performing inspections relating to issuers, the PCAOB has a statutory mandate to inspect audits of broker-dealers registered with the SEC. Currently, the Board has an interim broker-dealer inspection program in place, and has issued a public report on the progress of the interim broker-dealer inspections program that provided an overview of the program and the audit deficiencies identified in the limited initial group of inspected audits of brokers and dealers. The Board plans to continue inspections under the interim program until rules for a permanent program take effect.
I believe it is critical that the PCAOB has the resources it needs to get the job done. The budget review and approval process allows the SEC to discharge its responsibility by determining appropriate funding levels, and ensuring that these funds that are collected from issuers and broker-dealers are used efficiently and effectively.
While we are here today to consider approval of the PCAOB´s budget, the Commission understands that uncertainty remains regarding sequestration, which would cause across-the-board federal budget cuts. In the event that Congress does not enact legislation to prevent sequestration, the Office of Management and Budget has indicated that the 2013 budget of the PCAOB would be subject to sequestration. Although today the Commission is considering the PCAOB´s 2013 budget as adopted by the PCAOB, I would expect that in the event that sequestration occurs and the PCAOB´s 2013 budget is indeed affected, the PCAOB will work with the Commission and Commission staff as appropriate regarding implementation of sequestration.
With us here today is Jim Doty, Chairman of the PCAOB. I would like to thank Chairman Doty for being here and for his leadership of the Board during this past year. I would also like to thank the other Board members – Lew Ferguson, Jeannette Franzel, Jay Hanson, and Steve Harris – as well as the staff at the PCAOB and the SEC, especially Paul Beswick, Brian Croteau, Jeff Minton, Amy Hargrett, Kevin Stout, and Jeff Cohan in the Office of the Chief Accountant and Ken Johnson in the Office of Financial Management who worked on the review of the PCAOB´s 2013 budget.
I will now turn this meeting over to Paul Beswick, the SEC´s Chief Accountant.