I would like to begin by focusing on the Strategic Plan which the Board is approving today.
As I noted last year, the Board's Strategic Plan is intended to be a high level roadmap for how the Board will achieve its mission to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports. Although we retain the general format of the prior versions of the Plan, we have re-focused our goals for 2013-17 to better reflect the Board's desire to provide effective oversight of the auditing profession, to make a constructive impact in the market for audit services and the quality of financial reporting, and to foster an environment with dedicated people and a positive workplace culture.
In addition to setting forth strategies relating to the core mission of the Board — registration, inspections, enforcement and standard setting, the Board also has integrated into this plan the near-term priorities first identified by the Board last year. We have made some progress on each of these, but most of them will be multi-year efforts. The priorities include efforts to improve our inspection reports and remediation determination process, develop audit quality indicators, enhance our inspection finding analysis capabilities, clarify our standard setting framework, and increase the Board's interaction with audit committees.
With a commitment from our staff to these priorities, we have accomplished a lot. Our inspection reports are being issued more quickly, although we insist on maintaining high quality and consistency in our reporting process. We have added information to inspection reports related to auditing standards implicated in our findings, and we hope you will see additional improvements along these lines in next year's reports. We have started outreach on how to improve the content and readability of our inspection reports, and people shared some excellent ideas. We will continue these discussions next year and hope to provide more useful information in individual inspection reports as well as our general reports.
In the area of remediation, the staff has largely has cleared the backlog of old remediation submissions relating to inspections conducted before 2010, and, going forward, in most cases, the Inspections Division expects to present to the Board recommendations for remediation determinations within ten months following the remediation period. Our staff also issued publicly and to individual firms some additional guidance about how the staff implements the Board's 2006 release on the remediation process and the factors considered in evaluating whether a firm has adequately addressed its quality control weaknesses and deficiencies. We continue to consider whether other information would be helpful to firms, investors and the public about this important process — intended by the drafters of the Sarbanes-Oxley Act as one of the Board's strongest tools for driving audit quality improvements. I would like to see the Board issue a general purpose report in 2014 on our observations about actions taken by firms that successfully remediated their quality control deficiencies.
Our Office of Research and Analysis has tackled with enthusiasm the project to develop audit quality indicators, including through extensive research and outreach. After several discussions on the topic with our Standing Advisory Group, Investor Advisory Group and others, the staff is currently preparing a concept release to provide a vehicle for broad public input on the project and to seek comment on a series of data points related to the inputs, processes and results of audits that show promise as quantitative and measurable audit quality indicators.
In a related project, our Inspections Division has enhanced its data aggregation of inspection findings and created systems permitting for easier internal analysis of inspection findings and trends. The Division is continuing its work in this area by further enhancing its inspection and documentation processes and by taking advantage of information technology opportunities. This is a long-term effort that will involve continuous improvement but will provide valuable information to the Board to help shape all of our regulatory efforts. Eventually, I hope these efforts provide the Board with a basis to publish more comprehensive reports on both the deficiencies we note during inspections and the characteristics of successful audits with few deficiencies.
The Office of the Chief Auditor has developed, for the Board's consideration, a more formal framework to govern the Board's standard setting projects from inception of a project to adoption of a new standard. This framework, when fully integrated with the Board's economic analysis processes, will provide added clarity and continuity to the standard-setting process and prioritization and will help the Board to more timely issue effective, meaningful and balanced auditing standards.
Finally, the Board has stepped up its efforts in connection with outreach to audit committees. In 2012 we issued AS 16, governing audit committee communications, and a release aimed at providing to audit committees helpful information about PCAOB inspections. In 2013, Board members participated in a number of gatherings of audit committee members, hosted by corporate governance organizations, providers of continuing education, audit firms and others. We made ourselves available to discuss our ongoing activities, to answer questions, and to obtain feedback about audit committee views on audit oversight and ongoing PCAOB projects. This interaction has been invaluable to me, as a regulator, and we have received extensive positive feedback from audit committees in response to these efforts. Recently, we also added a separate page to our website to highlight information on our website most useful to audit committees. We hope to provide helpful materials directed at audit committees on an ongoing basis. Next year, we plan to formalize our audit committee outreach by hosting meetings for audit committee members, and one particular goal is to reach audit committee members of small and medium-sized companies, which historically have been a harder audience for us to reach.
Overall, I am pleased with the progress we have made this year on these important priorities, and I look forward to continuing our work in 2014.
Beyond formalizing the Board's near term priorities, this Strategic Plan also sets forth separately an objective related to the Board's oversight over brokers and dealers. This reflects the importance of the work done by the staff to date in connection with our interim inspection program and our plans to design a permanent oversight and inspections program in the years to come, taking into account new SEC rules for brokers and dealers and new PCAOB auditing standards for their auditors.
Finally, the Plan reflects an increasing focus on economic analysis by the PCAOB. Although the Board historically has considered the potential advantages and disadvantages of its regulatory activities, we are now beginning to educate ourselves on a more formal level, and availing ourselves of the expertise of trained economists, in the area of economic analysis of regulatory activities. To that end, the Board has expanded its team of economists. We currently have four economists in our Office of Research and Analysis. As of next week, we will have two in the Office of the Chief Auditor to help us integrate economic analysis directly into our standard setting process from the ground up. We will further expand our team of economists in 2014 and also will continue to refine our approach to economic analysis, including by finalizing internal guidance on economic analysis that is currently in progress. In addition, the Board announced recently the creation of a Center for Economic Analysis, which will further develop the PCAOB's economic analysis capabilities, help us design appropriate tools for measuring relevant costs and benefits, and also provide us with economic perspectives on a range of our activities, including inspections risk analysis, trend analysis, as well as the PCAOB's performance and effectiveness.
I am a strong supporter of economic analysis in financial regulation and applaud our staff's progress in this area. Already, I have learned a great deal from our economists, and I believe that the PCAOB's regulatory activities will be stronger and better tailored to relevant problems as a result of their involvement. The Center for Economic Analysis should provide a strong basis for the ongoing development of our economic analysis framework and tools. That said, I believe that we need to take care in implementing this new function to provide the appropriate focus for the Center and to ensure close coordination with the existing offices and divisions of the PCAOB to avoid overlap in their efforts or miscommunications about roles.
Finally, the Board also will continue to focus in 2013 and beyond on its long-standing efforts with respect to its core programs of registration, inspections, enforcement and standard setting. As I noted last year, our international program will remain a key focus. Thanks to the efforts of our Office of International Affairs and the support of the Division of Registration and Inspections, the Office of Research and Analysis, and others, we again have added to the growing list of jurisdictions where we are able to conduct inspections, either alone or jointly with a home country regulator. Our level of bilateral cooperation has never been higher, and we believe, and hear from our counterparts, that both sides benefit from our joint efforts on inspections. Our efforts were facilitated in part by the issuance by the European Commission of a renewed adequacy determination with respect to audit oversight, which permits European Union member states to continue their cooperation with the PCAOB. We anticipate reaching cooperative arrangements with several other EU member states in the new year. Nevertheless, we still face challenges in this arena, including persistent obstacles to inspections and enforcement in some countries. This cannot continue indefinitely.
Prioritizing our standard setting agenda is critical. Although our integration of economic analysis into standard-setting process has caused some delays, we have an active schedule for the coming year. In addition to taking a step toward creating a more comprehensive and accessible system of auditing standards through our reorganization project, we plan to work on a series of important auditor performance standards, including related parties; auditors' responsibilities for other firms, accountants or specialists; going concern; fair values and estimates; confirmations; and subsequent events. I anticipate that we will add to this list consideration of auditing issues related to a new accounting standard on revenue recognition that is expected to be issued soon by the Financial Accounting Standards Board and the International Accounting Standards Board. As one of the most important numbers in the financial statements, revenue merits substantial auditor attention. When the new standard is issued, the Board will consider whether to issue guidance or commence a project to set new auditing standards, and it is my goal that we provide additional clarity to auditors by the time the new accounting standard goes into effect. Finally, the Board's standard setting agenda includes an important project dedicated to overhauling the quality control standards that broadly govern the work of audit firms.
Let me conclude my comments on the Strategic Plan by to thanking everyone involved in the drafting of this important document. Strategic planning, based on the organization's strengths and weaknesses, challenges and opportunities, permits us to think broadly about the future direction for the PCAOB while also requiring us to plan out carefully how to achieve our goals. We have made good progress in this area, but I believe we can be even more proactive, creative and effective at refining our goals and strategies. I also look forward to the results of the work of the Center for Economic Analysis on the Board's performance metrics and its recommendations for how best to track and document the Board's many successes as well as areas for improvement.
Consistent with the goals and objectives set forth in the Strategic Plan, we are also approving today the PCAOB's budget for 2014. Coming in at just over $254 Million, the 2014 budget represents an increase of just over 5 percent over the budget for 2013. Complicating this year's analysis, however, is the sequestration of a portion of the PCAOB's budget, required by federal law, which resulted in a revised spending plan for 2013 that reduced the PCAOB's spending authority by $12 million. Compared to that revised spending plan, the budget increase for 2014 is 10.6%. However, compared to our current estimate of where we will end 2013 for actual spending, the increase is over 15%.
We also expect the Board's budget to be subject to sequestration in 2014, and we will work with the SEC to make any necessary adjustments to the budget at the appropriate time.
The single largest factor driving the 2014 budget increase — approximately 73% -- is personnel costs. The Board proposes to increase its staff by 21 individuals, most of whom will be designated to the Board's broker-dealer program, its new economic analysis efforts, and increased needs for information technology. In addition, the Board will fill 30 positions that were not filled in 2013, in part due to sequestration, as well as pay for the annualized costs of employees hired in 2013 and accommodate higher compensation and benefit costs as well as training and relocation expenses.
By program area, the budget increase will be allocated approximately 30% to inspections, just under 30% to Administration (with the majority funding office relocation and construction), with the remaining 40% funding primarily new work in information technology, enforcement, standards and economic analysis.
I support the budget we are approving today. I believe that it appropriately increases the Board's resources where they are needed most to achieve our mission of improving audit quality. We also expect to find ourselves, however, with an underspend for 2013 amounting to approximately $9 million compared to the revised spending plan. This is probably attributable in part to an overly cautious approach to our spending when sequestration requirements went into effect, and in part to other circumstances such as a lack of access to certain countries, slower than anticipated hiring, and related issues. While the Board prides itself on its careful stewardship of resources, we are also mindful of the fact that our funds are not our own but come from public companies and broker-dealers. We do not take lightly the assumptions and projections that go into our budget and ultimately form the basis for required accounting support fees, and it is my hope that we will be closer to the mark in the coming years.
Finally, a few words about our anticipated future spending, beyond 2014: As noted above, compared to the estimate of our 2013 spend, the 2014 budget is an increase of over 15%. While our budget increases, overall, have been declining in recent years, and 2013 may be an aberration as the first year of sequestration, the Board does have to ask itself how and when it will reach a "steady state" requiring little or no additional staff growth. Our broker-dealer program is still in flux and the important decisions about a permanent inspection program will affect our future growth. In addition, our program for economic analysis requires further consideration until we know the right level of investment in this program. Nevertheless, it is my hope that we can pin down these variables in the next few years, allowing us to operate on a more predictable and consistent level going forward.
I would like to join my fellow Board members in thanking the staff of the PCAOB for their efforts in connection with the Strategic Plan and Budget we are adopting today. In addition to members of our Budget Office, who spent many months getting us here, we benefitted from the views and experience of staff members from every PCAOB Office and Division as we considered how best to achieve the Board's mission effectively and efficiently. I would also like to thank the staff of the Securities and Exchange Commission for their considered questions, comments and feedback during this process.