The 2012 budget and related strategic plan are the result of several months of work, beginning shortly after three members (myself included) joined the Board. They reflect considerable effort and thought by board members and senior programmatic staff, who are here to respond to any matters Board members would like to highlight today.
I want to express my appreciation for our Chief Administrative Officer, Darrell Pauley, our Deputy CAO, Bill Wiggins, and Yoss Missaghian from our budget office. I also want to thank the SEC’s Chief Accountant, Jim Kroeker, and CFO Ken Johnson for their advice and for making themselves available for consultation throughout the development of both the budget and our strategic plan.
The strategic plan builds on the work of the last nine years. But it also reflects current challenges and the public’s expectations for the organization. I am pleased that the new plan includes an analysis of the PCAOB’s strengths, weaknesses, opportunities and threats. The exercise of developing this analysis highlighted several areas where the PCAOB can and should do more to protect investors. I also think the simplified mission statement will help both the public and staff focus on the purpose of our work.
The $227.7 million budget supports the strategic plan and reflects the challenges the PCAOB faces as it seeks to fulfill its investor protection mission. It provides for an increase in staff to do so, mainly for inspections. That augmentation of our inspection presence reflects, among other factors, the complexity of the global audits that we inspect, and are planning to inspect in twice as great a number as in 2011.
Thus we need these resources to maintain the scope of our inspections of large, annually inspected and smaller, triennially inspected domestic firms, at the same time that we plan to execute our mandate under the Dodd-Frank Act to inspect audits of broker-dealers.
Without resources to devote to these new inspections, the PCAOB would have to divert resources from, and thus reduce the scope of, its domestic inspection program for public company audits.
The budget also provides for reduced but appropriate funding for information technology. This funding will permit us to continue to equip our staff with appropriate tools. Our organization’s main assets are people and their knowledge. We need sophisticated information technology tools to apply those assets effectively and efficiently. We simply cannot do this job without it.
The Board has taken a number of steps to establish a more stable IT governance framework to provide for more consistent success in IT projects. This is an important area, and it will require dedicated involvement of the Board and program leaders to ensure that these steps are implemented and that our IT program becomes more effective. I am confident that under your leadership, Darrell, and the leadership of our new Deputy CAO for Information Technology, Nirav Kapadia, we will make substantial progress toward this goal in 2012.
Given all the work and support that has gone into the budget, I am comfortable that it is appropriate and should be submitted to the SEC for its approval.