Feb. 4, 2015
I´d like to begin by welcoming our guest of honor, PCAOB Chairman Jim Doty. I´d also like to thank our staff from the Office of the Chief Accountant: in particular, our Chief Accountant Jim Schnurr, his deputy Brian Croteau, who leads the SEC´s day-to-day oversight of the PCAOB, and his Chief Counsel Jeff Minton, along with numerous other OCA staff. I´d also like to thank Ken Johnson, the head of the Office of Financial Management, and his staff. And finally, I´d like to extend a thank you to the PCAOB´s other board members and staff, who do a lot of the heavy lifting behind the scenes. I know the budget formulation, review, and approval process takes a substantial degree of time and effort on everyone´s part. But given that it is the primary, public means for the Commission to exercise its statutorily- and judicially-granted oversight of the PCAOB, this process is an incredibly important one.
I know I say this every year, but the gravity of approving a $250 million budget, and resulting $227 million accounting support fee—the latter, of course, is in essence a tax passed ultimately to the investing public—demands a process that is no less public than the congressional oversight applied to the SEC´s own budget.
Finally, this process is important because the PCAOB´s budget and associated strategic plan set the broad outlines of the PCAOB´s priorities, particularly for the current year but also for several years down the road. While these priorities generally seem appropriate, I do have some questions about some of the details. In particular, echoing a theme I raised at last December´s AICPA conference, I am concerned that PCAOB´s limited standard-setting resources have been focused too heavily on disclosure projects. As I have been saying for years, an agency´s priorities and its agenda are hugely important.[1] This applies with no less force to the PCAOB. So to the extent that this focus on disclosure comes at the expense of making meaningful progress on core audit performance standards, which would drive improved auditor performance, those priorities need to be reexamined. Some progress has been made in the past year on performance standards, but I am concerned that much more needs to be done.
* * *
At this point, I´d like to raise a few questions for Chairman Doty—again, welcome and thank you for taking the time to appear before us today.
[1] See, e.g., Daniel M. Gallagher, Speech, The Importance of the SEC´s Rulemaking Agenda—You Are What You Prioritize: Remarks at the 47th Annual Securities Regulation Seminar of the Los Angeles County Bar Association (Oct. 24, 2014), available at http://www.sec.gov/News/Speech/Detail/Speech/1370543283858; Daniel M. Gallagher, Speech, The Securities and Exchange Commission—The Next 80 Years: The 15th Annual A.A. Sommer, Jr. Lecture on Corporate, Securities and Financial Law (Oct. 16, 2014), available at http://www.sec.gov/News/Speech/Detail/Speech/1370543190122; Daniel M. Gallagher, Speech, A Renewed Focus on SEC Priorities: Remarks at the AICPA/SIFMA Financial Management Society Conference on the Securities Industry (Oct. 25, 2013), available at http://www.sec.gov/News/Speech/Detail/Speech/1370540102737.
Last modified: Feb. 4, 2015