Mr. Chairman—Thank you, and I join you in welcoming our distinguished panelists here at Rice University's Jesse H. Jones Graduate School of Business. I commend you for holding these roundtables and for affording all interested parties an opportunity to be heard.
It would be hard to overstate the importance of auditor independence and auditor skepticism to capital formation in this country, to the functioning of our securities markets, and to the auditing profession itself. In 1984, the Supreme Court stated that "the SEC requires the filing of audited financial statements in order to obviate the fear of loss from reliance on inaccurate information, thereby encouraging public investment in the nation's industries;" and that "the independent auditor's obligation to serve the public interest assures that the integrity of the securities markets will be preserved…."
The court also noted that "the independent auditor assumes a public responsibility transcending any employment relationship with the client," and that "this 'public watchdog' function demands complete fidelity to the public trust."
While these basic auditor independence concepts are clear, the application of these concepts in a world where auditing firms are for-profit, multi-service enterprises paid by the companies being audited, has been debated for many years and continues to challenge both the firms and audit regulators.
The Board is holding these roundtables because our inspectors are continuing to find numerous instances where auditors are not approaching at least some aspects of their audit work with the independence, objectivity and professional skepticism demanded by PCAOB standards. And our inspectors are not alone. Reports published by the inspection staffs of other countries' audit regulators frequently identify issues related to auditors' independence and skepticism.
Not surprisingly, the last two press releases issued by the International Forum of Independent Audit Regulators (IFIAR), after their meetings this year in Busan, South Korea in April, and in London, England last month, addressed the issue of "How to improve auditor independence, objectivity and professional skepticism, and the benefits and problems that might result from mandatory rotation."
Many countries are moving ahead with solutions tailored to their markets. For example:
During the Board's first public meeting in Washington, D.C. in March, and our second in San Francisco four months ago, panelists suggested a number of methods for enhancing auditor independence in the United States, including, but certainly not limited to, re-tendering, enhanced independent audit committees, greater transparency of audit tenure, and mandatory rotation. I look forward to hearing more about possible solutions from the panelists today.
In short, across the globe, there appears to be an emerging consensus among regulators that more must be done to ensure the independence, objectivity and skepticism of auditors so investors will have confidence that high quality audits are being performed to test the accuracy and reliability of corporate disclosures.
These roundtables are an excellent opportunity for the Board to create a thorough and lasting hearing record and, before taking any action, to explore each of the recommendations brought to our attention. They allow us to very carefully consider the intended and unintended consequences of each recommended course of action, including, importantly, their potential costs and benefits.
Once again, I thank our panelists for joining us today. Your input is most welcome.
 United States v. Arthur Young, 465 U.S. 805, 819 note 15 (1984).
 Id., at 819.
 Id., at 817 and 818 (emphasis in original).
 IFIAR is comprised of a group of independent audit regulators representing 44 jurisdictions from around the world.