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Statement on the PCAOB’s 2022 Budget

Dec. 15, 2021

The mission of the Public Company Accounting Oversight Board (PCAOB or Board) is set forth directly in its enabling statute. It is to oversee audits “in order to protect the interests of investors.”[1] Investor protection is not one of prong of the mission; it is the mission. It is the lens through which we gauge the Board’s success in its central endeavors – standard setting, inspections, and enforcement.

In each of these areas, I hope the new Board will bring new focus. In recent years, we’ve seen enforcement cases drop by approximately two-thirds,[2] the number of inspection reports issued since 2018 fall to just over half of prior levels (a big drop even considering Covid-related travel restrictions),[3] and dozens of audit standards in need of modernization. There is much work to be done. So I’m pleased to see that next year’s budget represents a significant increase in staffing levels and hope that portends renewed commitment to robust inspection and enforcement, expeditious standard setting, and active public engagement, particularly with the investors whom the Board serves.

Of course our oversight responsibility with respect to the Board extends beyond this annual approval of the budget. The Commission’s oversight mandate requires us to fully engage in a balanced and thoughtful exchange with the Board to help it achieve its potential and intended purpose under the Sarbanes Oxley Act. So I want to thank the staff in our Office of the Chief Accountant (OCA) for the work they do throughout the year related to the PCAOB. And particularly this year, during a period of transition, I appreciate OCA’s efforts in formulating a thoughtful and thorough set of observations and requests for the Commission’s detailed passback letter to the Board in response to the preliminary budget. I’m pleased to hear from Acting Chairperson DesParte that the requests in the passback letter were helpful and meaningfully informed the final budget. I hope the letter may continue to guide the Board’s efforts next year. I want to thank the staff in our Office of Financial Management as well for their work reviewing the budget.

Finally, importantly, I want thank Acting Chairperson DesParte for his continued service, and I want to extend a warm welcome and thank you to new Board Members Kara Stein and Christina Ho. I look forward welcoming additional new Board Member Anthony Thompson and incoming Chair Erica Williams – and to working with the new Board in the New Year. Thank you.

[1] 15 U.S.C. 7211(a) (“There is established the Public Company Accounting Oversight Board, to oversee the audit of companies that are subject to the securities laws, and related matters, in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports.”).

[2] Cornerstone Research, Accounting and Auditing Enforcement Activity—2020 Review and Analysis (showing enforcement numbers droping from 45 in 2017 to 13 in 2020).

[3] PCAOB, Firm Inspection Reports (showing 881 inspection reports for 2014-2017, and 462 for 2018-2021).

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