Thank you, Mr. Chairman.
The choice the Board faces this morning is clearly stated in the Board’s release. The Board must decide either (1) to postpone certain inspections of foreign registered public accounting firms while continuing discussions in an attempt to resolve legal obstacles or sovereignty-based objections of local authorities to those inspections or (2) to proceed with inspections by making inspection demands on individual firms despite those objections.
In making its decision, the Board has to balance some difficult considerations.
Section 104 (b)(1) of the Sarbanes-Oxley Act makes clear that all registered accounting firms are to be inspected every year if the firm issues audit reports for over 100 issuers; or at least once every three years if the firm issues less than that number.
Section 104 (b)(2) also provides for limited exceptions to this requirement “if the Board finds that different inspection schedules are consistent with the purpose of [the] Act, the public interest, and the protection of investors.”
Thus, the question before the Board this morning is whether the proposal we are considering is in fact consistent with the purpose of Sarbanes-Oxley, with the public interest, and with the protection of investors. This is a close call, and I look forward to exploring these issues in some depth during the question period.
What is not a close call to me is that part of the release seeking comment on whether to disclose on our Web site a list of all registered firms yet to be inspected.
Just as I believe that firms that have failed to adequately respond to our quality control criticisms within the statutorily required twelve-month remediation period should be prominently and conspicuously disclosed on our Web site, so I also believe should this list of uninspected firms be similarly disclosed.
Sunshine is the best disinfectant and investors deserve this type of information in an easily accessible form on our Web site, as notice that the firms involved have not been subject to the Board’s expected oversight.
Finally, I know how much hard work Michael Stevenson, Rhonda Schnare and Carl Calender have put into this release and I would like to thank them for their efforts.