Mr. Chairman. I will be brief because I, together with all the other Board members, have made statements on this topic before at our open Board meetings on March 22 and June 21 and these are posted on our Website.
Let me say simply:
The law states that the purpose of the PCAOB is "to protect the interest of investors and further the public interest in the preparation of informative … [independent] audit reports". I stress the words "investors" and "informative".
Investors clearly do not believe the current three paragraph, largely boilerplate, binary audit report, is either sufficiently informative or serves their needs.
This is apparent from comments made to regulators both in the United States and abroad in the context of the recent financial crisis.
So, from my vantage point the issue before us today is how best to provide that information in a cost effective and efficient way — directly to investors. And by directly to investors, I mean not wholly funneled through management or audit committees.
I ask myself some basic questions:
What keeps an auditor awake at night?
What information does an auditor learn from an audit that he or she would want to know as an investor?
Why shouldn't auditors disclose to investors that information and the same significant risks they disclose to audit committees?
And, since all that investors are asking for is what auditors already know, why can't this be done easily and cost effectively?
There was a time — going back to the days of Arthur Andersen and Leonard Spacek that the profession embraced their obligation to safeguard investors' interests. I think we need to return to that mindset and provide investors with more of the information they are asking for.
I want to thank Kurk Schacht and Joe Carcello for the surveys they conducted for the Certified Financial Analysts and the Board's Investor Advisory Group which clearly demonstrate the desire amongst investor groups for modernizing today's antiquated audit report.
I look forward to hearing from our distinguished participants.
Thank you, Mr. Chairman