Statement on the PCAOB's 2026 Budget

Remarks as prepared for delivery 

At today's open meeting, we are considering the 2026 budget for the Public Company Accounting Oversight Board (PCAOB). As such, this is an appropriate time to take stock, to reflect on where the PCAOB has been and where it may be going.

At the outset, I want to thank the budget team staff who worked tirelessly over nights and weekends to prepare this budget in an extraordinarily tight window. Thank you for diligence and care to get us to this point.

In 2002, Congress passed the Sarbanes-Oxley Act, almost unanimously, to restore investor and public trust in the American capital markets.¹ Through that law, Congress reformed aspects of the public company audit, and of public company governance. The Act’s first Title, which created the PCAOB, reflected the view that effective oversight of public company auditing was in the interest of investors, and of the public more generally.

According to PCAOB lore, on its first day of operation nearly 24 years ago, the eight or so employees of the Board, four of whom were Board Members, met for the first time and began mapping the new organization’s course with little more than the statute to guide them. Since then, the PCAOB has built itself into an efficient and internationally respected regulatory body, whose staff have the skills, expertise, and good judgment necessary to oversee an activity as complex, and wide-ranging, as auditing.

Auditing and its oversight are not simple, but they are both extremely important and matter a great deal to investors, our markets, and our economy. Much of the work that the PCAOB does occurs out of sight, in part owing to the important obligation that Congress vested in the PCAOB to keep audit information confidential.

To do that work, the PCAOB has built, over twenty years, an incredibly talented staff. We have over 500 experienced audit inspectors on the staff of the PCAOB. Those leading and staffing inspection teams have decades worth of relevant accounting and auditing experience, covering industry sectors spanning the economy. Each year, our inspections staff examine between 220 and 230 audit firms in over 30 jurisdictions, and commonly review over 900 audits across domestic annual, domestic triennial, international, and broker-dealer audits. Our inspections involve multiple levels of reviews, with the outcome being our inspection reports that provide feedback to firms and help improve the audit process, and provide transparency to audit committees, investors, and the capital markets.

The Office of the Chief Auditor, which drafts audit standards and related rules, has auditors and rule-writing lawyers with the highest levels of accounting, auditing, and business transactional experience. Their work is supported by outstanding economists. Our standard-setting staff remains current with the auditing approaches handled by the most sophisticated auditors in the world using the most innovative technologies, deployed for the most sophisticated corporate clients on the planet. 

The Board and staff also engage every year in public outreach forums, issue spotlights and videos, and provide other assistance to help smaller firms, issuers and their audit committees, and broker-dealers understand our approach and work with us.

Furthermore, we work to uphold the integrity of the profession through targeted discipline for “bad apples” – for example, to sanction the manipulation of audit workpapers, firms involved in the recent exam cheating scandals, badly deficient audits, or serious breaches of auditor independence requirements.

An important part of our work is the inspection of audits that occur outside of the United States but involve companies listed on U.S. stock exchanges, including in mainland China. The PCAOB has inspected in more than 50 foreign jurisdictions. This work is essential, given the global nature of commerce and of public company listings and audits.

Notably, the PCAOB has been able to accomplish what U.S. government agencies could not—inspections of audits conducted outside of the U.S., to protect investors from all over the world in U.S. listed companies. Indeed, that is precisely why Congress enacted the Holding Foreign Companies Accountable Act, which makes any inability for the PCAOB to inspect or enforce against an audit firm in a foreign jurisdiction the basis for the delisting of companies on U.S. stock exchanges.² It was this statute that finally opened up mainland China and Hong Kong audits to PCAOB inspection.

It’s a credit to the PCAOB’s professionalism and skill at inspecting in a complex global audit environment that in just a few short years since the August 2022 agreement with China, our inspectors have already inspected dozens of Hong Kong and mainland Chinese audit firms, enabling us to have covered all of the firms currently auditing U.S.-listed companies. Our talented enforcement team has also conducted related enforcement actions arising from that work. 

The PCAOB also takes seriously our obligations to provide regulatory coordination and leadership with our international counterparts. Through the International Forum of Independent Audit Regulators (IFIAR), whose membership includes 56 audit regulators, the PCAOB plays an important role in bringing an American perspective to audit oversight globally. At IFIAR, I chair the Global Audit Quality (GAQ) Working Group, which engages in a regular dialogue with the six largest global network firms. The GAQ brings global regulators and audit firms together for candid conversations about the challenges and opportunities for furthering audit quality across jurisdictions.

In short, there is a lot that the PCAOB does to help secure the integrity of financial reporting, for the benefit of U.S. investors and the American capital markets. And while no organization is perfect, our genuine strengths have enabled the PCAOB to modernize decades-old audit standards and raise the level of audit quality for the benefit of investors and the integrity of our capital markets.

Now, as we look to the future with our budget, we need to be asking ourselves tough questions.

• Are we meeting the needs of the moment, when a wide variety of risks, not least of which are the pressures of technological innovation, call for continued thoughtfulness and vigilance by both auditors and audit regulators? 
• Are we being good stewards of the more than twenty years of investment in building an organization of highly skilled people and the need to working effectively across an extraordinarily complex audit environment? 
• Are we investing in the future, to capture the transformative capabilities of emerging technologies for our mission and purpose?
• Are we being appropriately responsive to the priorities and views of those that supervise us? 

These are not simple questions, nor do they yield easy answers.

I won’t say much about the details of the budget, except to underscore that future compensation analyses, to be completed through certain studies contemplated by this budget, must be guided by the statute, which provides that PCAOB employees receive salaries:

“[A]t a level that is comparable to private sector self-regulatory, accounting, technical, supervisory, and other staff or management provisions.”³

That statutory provision has been an essential policy tool for enabling the PCAOB to be effective in our mission.

With respect to our overall staffing level – now set at 817 – and our organizational structure, the PCAOB must ensure that it is data-driven, objective about realities, and mission-oriented.

The complex standard-setting, oversight, and confidential data protection functions of the PCAOB are analogous to the work performed by the Financial Accounting Standards Board, the regional Federal Reserve Banks, and FINRA. All of those organizations are designed, staffed, and compensated, including at a leadership level, to provide the level of professionalism and the sustained commitment to the public interest which are necessary to maintain the trust and confidence of both market participants and the public.

While I am always willing to look at new ways to do things, I am concerned about real risks this organization faces, including the retention of talented staff today, the development of higher skilled, technology-enabled capacity, and the attraction of talented leadership in the future. The extent of those risks will, ultimately, depend on the manner in which this budget is implemented, including the results of the reviews that this budget contemplates; and the outcomes of these choices may not be known for several years.

Let me be clear, I’m not opposed to being cost conscious and efficient, or reviewing organizational effectiveness, but we have to keep the context and risks in mind. Compared to a U.S. public equity market capitalization of more than $67 trillion, the PCAOB’s entire 2026 budget is less than one thousandth of a penny per share. Against the backdrop of markets where investors are increasingly concerned about valuation, fraud, leverage, AI, and other emerging risks in financial reporting, we need to proceed with caution.

Ultimately, I will support this budget because I believe that this Board has navigated the narrow shoals that have been laid out for us with the best possible result at this time, and because this budget will permit the PCAOB to continue to prove its worth and value, helping our public capital markets to remain the deepest, most liquid, and most trusted in the entire world.