In 2002, Congress enacted the Sarbanes-Oxley Act in response to the accounting scandals of that time. The law targeted the glaring deficiencies of a self-policing system of financial reporting rife with conflicts of interest. The large-scale accounting frauds this system produced inflicted substantial harm to investors and to our capital markets.
Congress established the PCAOB (the “Board”) “to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports.” During my time in Congress, I, too, had a front row seat to the crafting and enactment of the Sarbanes-Oxley Act. The final version of the law passed the House of Representative nearly unanimously and the U.S. Senate unanimously.
The Board’s budget is the vehicle for faithfully executing the law as intended by Congress.
Investor confidence that all issuers are abiding by the highest standards of financial reporting depends on auditors fulfilling their duty as gatekeepers and being held accountable when they fall short of meeting their obligations.
In carrying out its core mission as directed by Congress, and in light of recent progress in improving audit quality, the Board has convincingly demonstrated that it is up to the task. With a robust inspections record, both at home and abroad, and its successful efforts to speed up publication of its inspection reports, the Board has leveraged its resources effectively.
It has made strides in other areas, too – inspection reports that are more accessible to investors and issuers, and additional guidance to auditors, particularly those auditing small public companies.
The Board has taken on core challenges that any financial regulator worth its salt must always take on: modernizing outdated standards that have outlived their usefulness and holding wrongdoers accountable.
The FY25 budget is a credible approach to honor the Board’s responsibility to protect investors and advance the public interest.
The Board made changes to the budget in response to Commission recommendations, including reductions in compensation costs and in travel expenses.
I commend the Board for carrying out its mission-critical functions with its limited resources, while remaining efficient and nimble.
To Board Chair Erica Williams, thank you for your leadership and for your strategic approach to fulfilling the Board’s mission. And thank you for your kind words. It’s been a pleasure to work with you and with all of the Board’s members in advancing a number of priorities that will protect investors and strengthen our capital markets.
I am pleased to support the final budget. Best wishes to everyone for a happy and restful holiday season.
