Statement In Support Of The PCAOB’s 2025 Budget, SEC Commissioner Caroline A. Crenshaw

I’m happy today to support the PCAOB’s budget.  The budget is reasonably calibrated to help the PCAOB effect its mission of protecting investors and furthering the public interest in its regulation of public company and broker dealer audit reports. 

That oversight creates market stability.  First, it promotes transparency.  Investors need this transparency to, among other things, evaluate companies’ financial health and performance.  Transparency alone, however, is not enough.  The PCAOB’s oversight function also creates reliability.  Investors must be able to rely on financial information provided – to trust that it’s fair and accurate.  Together, this transparency and reliability create investor confidence. When investors have that confidence, investment decisions are made and capital flows to and among market participants. 

Today we help ensure that the PCAOB can continue, at least for the next year, to guide, oversee, and help maintain the integrity of companies’ financial disclosures.  For example, the PCAOB oversees accounting firms that prepare audit reports for public companies; establishes audit standards for those firms; and, when appropriate, investigates and disciplines those who fall short of those standards.  The PCAOB helps prevent fraud.

This is an enormous task.  The PCAOB oversees the process by which thousands of audits are performed every year.  There are over 6,500 actively reporting public companies and over 3,300 broker-dealers that must be audited by a public accounting firm every year.  And that just scratches the surface of what they do.

It takes a dedicated, highly specialized, and experienced workforce to carry out their mission.   It naturally follows that the biggest expenditure in the PCAOB's budget is its workforce, like so many other organizations.[1] 

But the benefit here far exceeds that cost.  The U.S. capital markets represent approximately $120 trillion in value, and the PCAOB’s budget is roughly $399 million. [2]  In other words, the cost of that investor faith and confidence is less than a penny on the dollar to issuers and the investing public.  Moreover, one can fixate on a micro scale on inspection findings or the number of rulemakings or enforcement actions, but on the macro scale the capital markets are flourishing.  The stock market is near record levels, the number of registration applications to the PCAOB has increased, and assets under management are near record levels, including for small asset managers.[3]  So to suggest that the PCAOB’s work has hindered capital markets just isn’t consistent with the facts on the ground.

Rather, today’s PCAOB is living up to its mission. They have engaged in rule and standard setting so that the audit profession is held to meaningful and modernized standards. The PCAOB has run a thorough process subject to public engagement, consensus building, and transparency. They have worked through arguments raised by litigious interest groups and lobbying organizations. In other words, they have represented the interests of the investing public and have deployed their budget effectively. The results are clear on their face. I am proud to support their work, and I have been for the past several years.

Thank you to the PCAOB staff, the Board, and the Office of the Chief Accountant here at the SEC.

Happy holidays.