I want to welcome everyone to the fourth annual meeting of the Investor Advisory Group of the Public Company Accounting Oversight Board (IAG).
I know that all of you are very busy and I appreciate the time you have taken to participate in today's meeting. In particular, I want to thank the members of each of our working groups for the effort they have devoted to the topics that we will be discussing this morning and this afternoon. I think they have done an excellent job in their preparation and we will have a most productive session.
Last year was the tenth anniversary of the Sarbanes-Oxley Act. Likewise, 2013 marks the tenth year of operation for the PCAOB. With these milestones in mind, we have provided each of you with a copy of our 2012 annual report, which outlines many of the Board's accomplishments since our inception. While we are proud of what we have done so far, our work to protect investors by improving the accuracy and reliability of corporate disclosures and improving audit quality is an ongoing effort.
This is where you — the Investor Advisory Group — come in. Beginning with its inaugural meeting in May 2010, the IAG has provided insight and advice to the Board in areas that are of significance to investors. Many of the actions taken by the Board in the past few years have been informed by, and indeed have been in response to, recommendations voiced by this Group.
For example, during that first meeting in 2010, the Group asked that the Board redouble its efforts to obtain access to foreign registered accounting firms for the purpose of conducting inspections. Under the leadership of our Chairmen, and with the dedicated efforts of our Office of International Affairs and Division of Registration and Inspections, that is exactly what we have done. Since 2010, the PCAOB has entered into 12 cooperative arrangements with audit regulators from such countries as the United Kingdom, Germany, Finland, France, Switzerland, The Netherlands, Spain, Norway, and Japan.
While these are significant achievements, we recognize that we have more to do, especially in those smaller European countries where we have yet to conduct inspections, as well as, obviously, in China. Fortunately, in June the EU issued a new Adequacy Decision for the PCAOB that runs through July 2016. The Adequacy Decision in effect certifies that the PCAOB has the ability and the necessary systems in place to protect non-public information. This new Adequacy Decision should allow us to conclude cooperation agreements in the coming months with those dozen or so smaller EU countries where we would like to conduct inspections. It also allowed us this summer to renew our existing cooperation agreements with the major EU audit regulators. The net result is that we should soon be able to inspect in all EU member states, at least through July 2016, when another new Adequacy Decision will be needed.
With respect to China, we are currently negotiating a Statement of Protocol with the relevant Chinese officials that would allow us to carry out inspections there. The fact that we reached a Memorandum of Understanding on enforcement with China in May is encouraging.
In addition, we are working to reach cooperation agreements with regulators in a number of other jurisdictions around the world, such as Brazil, Chile, New Zealand, and Turkey. While these agreements are not necessary for us to inspect in these jurisdictions, they are useful because they strengthen our relationships with the audit regulators in these countries.
Finally, in response to an IAG suggestion, our website now provides a list of the issuer clients of PCAOB-registered firms in jurisdictions where the PCAOB is still prevented from conducting inspections.
Turning back to the home front, this group also asked the Board to study and report on lessons learned from the financial crisis. In response, in September 2010, we issued a report on the observations of PCAOB inspectors related to audit risk areas affected by the crisis. Then, in December 2010, we issued an audit practice alert on the audit implications of breakdowns in the mortgage foreclosure process, and in December 2011 we issued a practice alert on assessing and responding to risk in the current economic environment.
Similarly, the IAG also wanted the Board to issue timely guidance on topical issues for auditors and boards of directors. Five audit practice alerts have been issued in the past three years, ranging in subject matter from the principal auditor's use of the work of foreign auditors, to risks in emerging markets, and most recently, an alert about professional skepticism.
We also issued five general inspection reports from 2012 through 2013.
The auditor's report has also been an important and recurring topic of discussion at nearly all of our meetings. In the 2010 meeting, it was suggested that the Board consider requiring disclosures of the major issues that concerned the auditor during the audit. In the 2011 meeting, the Working Group on "The Auditor's Report and The Role of the Auditor" presented survey results on the usefulness of the current report. These results further indicated what investors are looking for in the report. Then during the 2012 meeting, the IAG Working Group on the "Role, Relevancy and Value of the Audit" provided us with the results from another survey that demonstrated what investors believe auditors should do with respect to the other information that accompanies the audit report. Our staff considered the views expressed at those meetings as they developed the Board's current proposal, which was issued for comment on August 13th. We ask that you continue your efforts in this area by carefully considering this recent proposal. As in the past, your input is critical to this process.
In October 2011, the Board published a rule proposal on the disclosure of the engagement partner and certain other participants in the audit. This is another topic that the IAG has addressed repeatedly. As reflected in the latest Standard Setting Agenda which is on our website, we are planning to have a re-proposal on the subject of Transparency in the near future.
Going concern was another topic that the Group discussed in depth during its 2012 meeting. As reflected in our latest Standard Setting Agenda, the Board anticipates coming out with a proposal on going concern sometime before March 2014.
These are a few examples where the Investor Advisory Group's input has made a difference and helped the Board to establish its priorities and advance its efforts to protect investors.
Just as in the past, the Board intends to carefully consider the views you express on the topics you have chosen for today's discussion.
Now turning to today's schedule. The topics you have chosen for us to consider are:
We will end the day with an hour of general discussion, which I anticipate will likely include a discussion of the Board's transparency and the auditor's reporting model proposals as well as a general summary of the day's events.
 Report on Observations of PCAOB Inspectors Related To Audit Risk Areas Affected by the Economic Crisis