I support the 2013 proposed budget and the 2012-2016 strategic plan being presented to the Board today. These documents are the result of an organization-wide effort to diligently consider the strategies and resources needed to fulfill the PCAOB's mission of protecting investors and furthering the public interest in the preparation of informative, accurate and independent audit reports.
The high level of effort put into developing the strategic plan and the budget by staff from all levels of the organization reflects the serious deliberations that took place on how to best meet the PCAOB's investor-protection mission and oversight responsibilities through strategies and approaches that promote the most effective use and stewardship of PCAOB resources.
The PCAOB's statutory responsibilities, including registering and inspecting accounting firms that audit issuers and brokers and dealers; setting auditing standards to strengthen the reliability and relevance of audits for investors and other parties; and maintaining an effective enforcement and investigations function, together with other aspects of the PCAOB's operations and administration, result in a complex and heavy workload for the organization and its staff.
The strategic planning process has provided significant value in clarifying our thinking about the future direction of our programs, and in making decisions about program operations and resources for the 2013 proposed budget.
The 2013 proposed budget of $245.6 million represents an 8 percent increase over the 2012 budget. It reflects a thoughtful balance of operational needs and a judicious allocation of resources. We continue to develop our broker-dealer inspection program, to expand our inspections overseas, and to refine our existing programs and activities. The majority of this increase is attributable to continued growth in the PCAOB's staff and operations for these programs.
It is important to note that, compared to prior years, we anticipate entering a phase over the next few years of a "leveling off" of growth, as the organization matures and reaches a more stable size and structure.
As the PCAOB approaches its 10th anniversary, it is appropriate and necessary to evaluate the organization's progress and work-to-date and consider making refinements to our programs and key operational and administrative processes. The PCAOB is a relatively new regulator and still has work to do to establish sustainable regulatory approaches for the long term, while being nimble and responsive to future risks and emerging issues.
The updates to the strategic plan reflect the PCAOB's efforts in these areas through the inclusion of new strategies and refinements to prior strategies. I support the priorities set out in the strategic plan, and am pleased that the Board has chosen to focus on the following near-term priority projects for 2013:
• improving the timeliness, content and readability of inspection reports, including through outreach designed to improve the usefulness of reports;
• improving the timeliness of remediation determinations and providing additional information about the PCAOB's remediation process;
• initiating a project to identify audit quality measures, with a longer term goal of tracking such measures with respect to domestic global network firms and reporting collective measures over time;
• enhancing the PCAOB's processes and systems to improve analysis and usefulness of PCAOB inspections findings, including comparative analysis across firms and over time, in order to better understand audit quality in firms and better inform the PCAOB's standard-setting and other regulatory activities;
• enhancing the framework for the PCAOB's standard-setting process in order to improve the effectiveness of the process as well as the standard-setting project tracking information provided to investors and the public; and
• enhancing PCAOB's outreach to and interaction with audit committees to constructively engage in areas of mutual interest, including auditor independence and audit quality.
The synergy and outcomes from these near-term priorities should help the PCAOB leverage its strengths in order to further investor protection through high quality and transparent audit oversight activities. A key element of this leverage involves a number of activities within the Office of Research and Analysis that are reflected in the 2013 budget. Under the leadership of its new director, the Office of Research and Analysis will play a key role in analyzing economic, industry, and other data for the Board and staff to use in achieving its priorities.
The strategic plan and budget also reflect important initiatives and strategies for the Office of Administration to achieve mature and optimized administrative functions that will help ensure that the PCAOB's programs are supported in an efficient and effective manner. Those initiatives reflect risk management principles for the most effective use and stewardship of PCAOB resources, and include the areas of budgeting, financial reporting, information technology, and human resources management. I am pleased that the budget and strategic plan include updated initiatives in the following areas:
• further implementation of the IT Governance Framework in managing our technology-related resources to help advance the PCAOB's mission;
• continued evolution of our strategies and approaches to managing and developing our most important resources — our people -- through a workplace culture that promotes excellence, integrity, diversity, respect, fairness, accountability, continuous learning, and careful stewardship of our resources; and
• continued enhancements to our internal control program.
I believe that the budget we are approving today appropriately reflects the Board's strategic priorities and resource needs for 2013 to fulfill our obligation of improving audit quality to protect investors and the public interest, while continuing the organization's evolution as a regulator.
In closing, I would like to join my fellow Board members in thanking the staff for their efforts in connection with the strategic plan and budget we are adopting today. I would also like to thank the staff of the Securities and Exchange Commission for their questions, comments, and feedback during the process of developing this budget.