Good morning and welcome to the Public Company Accounting Oversight Board’s third annual International Auditor Regulatory Institute.
My name is Dan Goelzer, and I am the acting Chairman of the PCAOB. I want to take this opportunity to thank all of you for joining us at this Institute and for your interest in devoting two days to discussing auditor oversight. I understand that there are roughly 100 people here today representing 42 countries. That turn-out is a remarkable demonstration of the importance that countries around the world attach to promoting audit quality and reliable financial reporting.
As all of you who work in the area of financial markets regulation can attest, we are seeing an unprecedented level of interest worldwide in the areas of corporate governance, financial reporting, and auditor regulation. This is hardly remarkable, given the pace at which globalization of the world’s capital markets has been occurring. The explosion during the past decade in cross-border listings, and the corollary cross-border linkage of trading markets, have eroded the old barriers that largely confined capital and investors to their home jurisdiction. Today, the financial world is much smaller and much more inter-connected than it was just a few years ago.
In this new financial world, regulators, like the markets themselves, need to be linked. It is essential for those charged with protecting investors, and with assuring the fairness and transparency of securities trading, to share ideas and information and to cooperate in their regulatory efforts. Just as capital and financial institutions can no longer focus solely on one market, neither can regulators.
Audit quality, in particular, has become a global issue. Companies today frequently operate and raise capital in many jurisdictions. Correspondingly, auditing has become a multi-national activity. The large global auditing networks have member firms around the globe, and audits of major multi-national companies may involve audit work in numerous countries. Even companies that operate only in their home jurisdiction may have investors scattered around the world. In short, an audit failure in one market can have far-reaching ramifications in many others.
The first step to successful cooperation in any field of regulation is an understanding of other regimes and practices. This idea – that, in order to work together successfully, we must each understand how other audit oversight bodies operate and how they seek to fulfill their mission – was one of the driving forces behind the PCAOB’s decision in 2006 to create this Institute. We strongly believe that enhancing mutual understanding and dialogue is the foundation on which cooperation must rest. And that, in turn, is one of the keys to improving global audit quality.
During the next two days, we hope to share some of the experience and knowledge that the PCAOB has gained over the past seven years that it has been in operation. Equally important, we also hope to learn from you. We will be presenting a series of panels that cover all aspects of the Board’s activities – including registration of audit firms; investigations and enforcement proceedings; inspections, both within the U.S. and outside; risk assessment; and audit standards-setting. We hope these panels will provide you with practical information and ideas that you can use in your own work.
The panels are not, however, intended to be one-way streets. There will be an opportunity during every panel for you to ask questions or provide comments. I strongly encourage you to do so. Our hope is that the Institute will provide a forum for a conversation, rather than just for presentations. The Q&A is really the most valuable part of these meetings, so please don’t be shy about speaking up. To make things easier, we have provided three ways for you to offer comments or ask questions –
First, you can simply comment directly by using the microphones in the audience. One is stationary in the aisle. Alternatively, our roving PCAOB staff will bring a portable microphone to anyone who raises his or her hand.
Second, you can submit your question or comment in writing on a note card. These cards are on your tables and in your notebooks. Just raise your hand and give the card to one of the members of the Office of International Affairs staff. Our staff will read the question or comment aloud so that the panel can respond.
Third, if you prefer, you can simply place a note card with questions or comments in the box at the back of room. The PCAOB staff will check the box periodically during breaks in the program and pass the cards on to the presenters.
Before I turn the floor over to the first panel, I want to mention a couple of administrative items. In particular, I want to bring to your attention to the evaluation form that you will find in the side pocket of your notebook. This form asks you to rate and comment on the effectiveness of each panel. While we ask that you wait to turn these in until the conclusion of the conference on Thursday, please be sure to fill in the form as the program goes along so that your impressions are fresh. Your feedback is very important to us and will help to shape next year’s Institute.
Also, we are aware that many of you need to stay in touch with your offices and families, so we have provided computer stations outside the auditorium where you can access the internet and check email. Free Wi-Fi is also available, so you should be able to access the internet on your own lap-top. Feel free to approach anyone from the staff of the Office of International Affairs staff if you need assistance.
Finally, I want to remind everyone that there will be a reception in the atrium of this building immediately following the last panel this afternoon. The reception is an opportunity to meet and mingle with the PCAOB Board and with members of the PCAOB’s senior staff, as well as with colleagues from around the world. Please join us.
Thank you for your attention, and I hope you will find the next two days interesting and valuable. I look forward to seeing you at the reception this evening and during the Board members panel tomorrow afternoon.
At this point, I want to introduce our first panel which will give you an overview of the PCAOB and its operations. Our panelists are Gordon Seymour, who is the General Counsel of the PCAOB; Bob Burns, Associate General Counsel; and Barbara Hannigan, our Ethics Officer and Senior Compliance Counsel.