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Statement by SEC Commissioner Regarding New Appointment to the PCAOB Board

Commissioner Luis A. Aguilar

U.S. Securities and Exchange Commission

Feb. 3, 2012

Today, the Commission has failed to fulfill its legal obligation. It has appointed a member to the Public Company Accounting Oversight Board (“PCAOB”) who has no demonstrable record of investor advocacy. Thus, the Commission has failed to satisfy its basic statutory mandate to appoint an individual who, among other factors, has “a demonstrated commitment to the interests of investors.”1 Accordingly, I do not support and must respectfully dissent for the reasons outlined below.

Congress established the PCAOB in response to scandalous audit failures, like Enron and WorldCom, that cost investors billions. In doing so, Congress entrusted this Commission with the significant responsibility of appointing the members of the PCAOB. In exercising this responsibility, the Commission is required to abide by the statutory criteria to appoint individuals “who have a demonstrated commitment to the interests of investors.”2

My objection to this appointment is based on the fact that the Commission must appoint individuals who have “demonstrated commitment to the interests of investors.” This is not the case here. Although the appointee is an experienced government auditor, and I appreciate her years of service, there is nothing in the evidentiary record that reflects a commitment to the interests of investors, or a history of advocacy for investor rights. I believe the Commission is bound to appoint an individual whose actions, public statements, and reputation demonstrate a clear and steadfast advocacy of the rights and interests of investors.

In reaching this decision, I considered many factors in the evidentiary record, including the professional biographies of each of the finalists for this position, my own interviews with the candidates, and the candidates’ published writings and remarks. I also considered the many letters received by the Commission from investors, respected members of the accounting profession and academic community, members of Congress, and others who supported the appointment of an investor advocate.

I also reviewed comment letters previously submitted to the PCAOB by the finalists for this position. In that connection, I was struck that not once in any of the four letters signed by today’s appointee, discussing topics such as the engagement quality review and risk assessment, was there any mention of the interests of investors. In fact, the word “investor” was not mentioned.3

This appointment is being made at a critical time for the PCAOB. There is much at stake. The recent financial crisis exposed an auditing process that continues to be seriously flawed. In response, the Board has embarked on various projects to enhance the relevance, credibility and transparency of audits, including important initiatives on auditor independence, audit transparency, and the auditor reporting model. The success of these projects will require a Board fully committed to investors as the owners of public companies, the providers of capital, and the primary beneficiaries of financial statements.

I believe that the Commission has failed to meet its obligation to appoint an individual with “a demonstrated commitment to the interests of investors.”

Unfortunately, as a result, I am forced to dissent.

1 Section 101(e)(1) of the Sarbanes-Oxley Act, 15 U.S.C. §7211(e)(1), “The Board shall have 5 members, appointed from among prominent individuals of integrity and reputation who have a demonstrated commitment to the interests of investors and the public, and an understanding of the responsibilities for and nature of the financial disclosures required of issuers, brokers, and dealers under the securities laws and the obligations of accountants with respect to the preparation and issuance of audit reports with respect to such disclosures.”

2 Id.

3 Neither did any of the letters signed by today’s appointee include the terms “owner,” “stockholder,” or “financial statement user.” See, (i) Comment Letters for Docket 025: Auditing Standard No. 7—Engagement Quality Review and Conforming Amendment to the Board’s Interim Quality Control Standards, letter of U.S. Government Accountability Office (April 16, 2009), available at; (ii) Comment Letters for Docket 026: Auditing Standards Related to the Auditor’s Assessment of and Response to Risk and Related Amendments to PCAOB Standards, letter of U.S. Government Accountability Office (February 18, 2009), available at, and letter of U.S. Government Accountability Office (March 2, 2010), available at, and (iii) Comment Letters for Docket 028: Proposed Auditing Standard Related to Confirmation and Related Amendments to PCAOB Standards; letter of U.S. Government Accountability Office (May 29, 2009), available at

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