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Statement at Open Meeting on 2014 PCAOB Budget

Commissioner Michael S. Piwowar

Feb. 5, 2014

Thank you, Chair White. Good morning, Chairman Doty, and representatives of the Public Company Accounting Oversight Board (“Board” or “PCAOB”). I welcome this opportunity — my first as a Commissioner — to consider the budget of the Board and get Chairman Doty’s perspective on it.

Established by Title I of the Sarbanes-Oxley Act and amended by Title IX of the Dodd-Frank Act, the statutory purpose of the Board is to oversee the audits of public companies, brokers, and dealers in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports.[1] The Board’s annual budget is supported by levying an accounting support fee on public companies and broker-dealers.[2] These fees, of course, are ultimately borne by the shareholders and customers of public companies and broker-dealers.

For 2014, the Board seeks more than a quarter billion dollars to fund its operations. The 2014 budget of $258 million represents a 22% increase over the Board’s 2012 expenditures. To put that number in perspective, $258 million is about one-fifth of the Commission’s $1.35 billion budget in the recently approved FY2014 Omnibus Appropriations Bill. Further, the Board has communicated to the Commission that it expects its budget to continue to grow, net of inflation, over the next few years.

I take the Commission’s PCAOB oversight responsibilities quite seriously, since we represent the only statutory check on the Board’s otherwise unilateral ability to impose accounting support fees. My chief concern is whether public investors are, in essence, “getting their money’s worth” from the Board’s efforts and the fees it imposes.

One important question for me is what is the best way to think about an appropriate size for the Board’s budget, taking into account its statutory mandates, who benefits from its activities, and who bears the costs for those activities. A related question is whether the Commission is using the right metrics to measure the performance outcomes of the Board. Over the course of my term as Commissioner, I will be seeking answers to these fundamental questions. In that respect, I want to acknowledge Chairman Doty’s efforts to respond to my recent request for additional data to provide better context for the Board’s registration and inspection program.

Finally, before moving on to my questions for Chairman Doty, I would like to express my thanks to the Board and its staff for preparing the budget, as well as for your outreach efforts when I first joined the Commission. I also want to express my appreciation to Commission staff in the Office of Chief Accountant and the Office of Financial Management for their efforts in advance of this meeting.

[1] Section 101 of the Sarbanes-Oxley Act, Public Law 107-204 (“Sarbanes-Oxley Act”), as amended by Section 982 of the Dodd-Frank Act, Public Law 111-203 (“Dodd-Frank Act”).

[2] See Section 109 of the Sarbanes-Oxley Act, as amended by Section 982 of the Dodd-Frank Act.

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