Accountability: Protecting Investors, the Public Interest and Prosperity

It is my distinct pleasure to be here today as part of the Association of Government Accountants' 62^nd Annual Professional Development Conference.

I find this conference's theme of "Big Challenges, Bigger Thinking" to be quite fitting, given the current fiscal pressures and operational challenges facing government entities at the federal, state, and local levels. Further, investors, businesses, and the public, as a whole, continue to endure financial volatility and economic uncertainties. We can all use some bigger thinking to cope with these big challenges.

Before I get started, I must tell you that the views I express today are my personal views and do not necessarily reflect the views of the Board or the staff of the PCAOB.

As the country continues its struggle to emerge from the deep recession of 2008 and 2009, and navigate the aftermath of the financial crisis, today's theme is highly relevant to all of us here because as accountability professionals, we play a role in helping to chart a path for a better future.

While the facts, circumstances and causes of various business cycles and crises may differ, there is always one mainstay: You. Financial reporting and auditing professionals in both the public and private sectors have the profound responsibility of promoting and advancing accountability, transparency, and integrity in our respective areas of practice.

I am confident that all of you in this room today endeavor on a daily basis to carry out this duty with which you're entrusted, and I applaud you for being here to collaborate with colleagues from around the country on these important issues.

I have had the pleasure of serving for the past 16 months as a Board Member of the Public Company Accounting Oversight Board (PCAOB), which was established under the Sarbanes-Oxley Act of 2002 to oversee the audits of public companies.

As you know, the Act was passed in the wake of a series of financial reporting and auditing scandals. These scandals, and the related business failures, served as a contagion that caused a loss of investor confidence in the U.S. equity markets. Many investors suffered financial losses; workers experienced a loss of jobs as well as retirement and pension savings; and local communities endured serious economic pressures.

Prior to my appointment at the PCAOB, I had the privilege of serving for almost 23 years at the U.S. Government Accountability Office (GAO), where I conducted audits for, and provided analysis and information to, the U.S. Congress and the public about many federal agencies and countless government programs.

My work at GAO also encompassed analysis and auditing of the federal government's responses to numerous financial and accountability crises in the private sector. For example, we reviewed new programs such as the Troubled Asset Relief Program (TARP), audited various federal financial reports, including TARP's annual financial statements, and analyzed the condition of the accounting profession throughout these crises.

The country's current environment of economic and fiscal policy uncertainty, as well as the most recent financial crisis, highlights the critical importance of accountability, transparency, and integrity of financial reporting in both the public and private sectors, and the often devastating consequences when those tenets are breached.

Today, I will briefly discuss:

1. the critical role that reliable financial reporting and auditing play in advancing the public interest;
2. the PCAOB's role in protecting investors and the public interest through independent, reliable, and high quality auditing of public companies and broker-dealers; and,
3. opportunities for "Bigger Thinking" in the accountability profession.

Reliable Financial Reporting and Auditing

First, the importance of reliable financial reporting and auditing is well illustrated in an American Assembly report issued 10 years ago. In November 2003, as the U.S. was recovering from the financial reporting and auditing scandals that arose out of the "bubble economy," the American Assembly^[1] met and later published a summary report entitled, The Future of the Accounting Profession,^[2] which analyzed the state of the profession at that time and its desired future state.

The report also included a number of recommendations to strengthen corporate financial reporting, auditing, and the integrity of those processes. The foreword to the printed version, by Richard W. Fisher, Chair of the Assembly, sums up the role of reliable financial reporting in our society, as follows:

"The bedrock of our commercial system is reliable accounting. Without high quality accounting standards, the lifeblood of capital cannot be efficiently allocated to its best use in building and sustaining our economy and way of life. The integrity of capitalism depends on the integrity of our accounting system."

The foreword further underscores the importance of this contribution to the functioning of the American commercial system, adding that "our commercial society underwrites our prosperity" through the jobs provided by American businesses, as well as the financial security for those who are invested in stocks or rely on other retirement plans. Our commercial system also provides the tax basis of every city and state, and the federal government.

More than half of American households rely on investments in securities that trade in the U.S. debt and equity markets to fund their retirement, education, and other goals. With $64.5 trillion in debt and equity securities outstanding for entities that trade in the U.S. markets as of Dec. 31, 2012, our markets play a prominent role in the global financial arena. The $64.5 trillion represents $38.2 trillion in debt securities issued by municipalities, the Treasury and agencies, and public companies,^[3] and $26.4 trillion global market capitalization of the 9,755 public companies actively filing audited annual financial statements with the Securities and Exchange Commission (SEC).^[4]

Although the percentage of Americans reporting that they invest directly in the U.S. stock markets has declined in the aftermath of the financial crisis and recession — from an estimated 62 percent in 2008 to 52 percent as of April 2013^[5] — investors' continued reliance on the U.S. securities markets for their financial well-being demonstrates both the critical need for integrity in financial reporting and the importance of providing reliable and credible information to our markets.^[6]

In the state and local municipal debt securities market, we have seen a trend of tremendous growth in recent years. At the end of 2002, the value of municipal securities outstanding was $1.8 trillion. By the end of 2012, it had more than doubled in size to $3.7 trillion. Such growth reflects how important this market has become, not just for investors, but also for funding state and local government activities. Entities issue municipal debt securities to finance a wide variety of public projects, maintain infrastructure, provide for cash flow, and to finance nongovernmental private projects.

Individual or "retail" investors hold as much as 75 percent of all outstanding municipal securities — both directly and indirectly —through mutual funds, money market funds, and closed-end funds.^[7]

The SEC recently has focused increased attention on the municipal securities market, which has not been subject to the same level of regulation as other sectors of the U.S. capital markets.

On July 31, 2012, the SEC published its Report of the Municipal Securities Market,^[8] which focuses on disclosure requirements and market structure, and makes recommendations aimed at improving the market, including providing more transparency for investors. The SEC also has highlighted, through recent enforcement actions, cases of false or misleading state and municipal financial reporting and other illegal acts.^[9]

At the federal level, with U.S. public debt at about $10.9 trillion as of December 2012,^[10] the growing size and import of federal debt reflects pressing fiscal challenges for policymakers and taxpayers that ultimately will impact Americans' financial well-being.

The federal government is currently facing serious challenges with unsustainable policies and programs, historically high debt levels, and difficult decisions to make about the future of government programs, spending, and taxes. I know that Comptroller General Gene Dodaro and others have spoken on this topic during the course of this conference, so I won't go into detail about these issues.

In the public sector, reliable financial reporting and auditing promote confidence in the integrity of government and accountability for use of public resources, including proceeds from government borrowing and taxes. Confidence and integrity are key to our nation's governing processes.

Government managers and officials entrusted with public resources are responsible for carrying out public functions and providing service to the public effectively, efficiently, economically, ethically, and equitably within the context of the statutory boundaries of a specific government program.^[11]

Reliable financial reporting by governments and municipalities, public companies, and other types of entities is critical, even though financial reporting serves somewhat different objectives in each sector.^[12] To varying degrees, these objectives serve the fundamental democratic need of a free market system for accountability, transparency, and integrity.

For example, financial reporting by governments emphasizes budgetary integrity and compliance by government agents,^[13] whereas financial reporting by public companies about their financial results "encourage[s] public investment in the nation's industries."^[14] In other words, reliable financial reporting and confidence in the integrity of both sectors promote capital formation, well-being for our citizens, prosperity, and opportunity.

And while companies and governments are responsible for producing reliable financial reports that serve these objectives, the American Assembly succinctly defines the fundamental role of auditors in this system as follows: "Auditors are gatekeepers whose primary allegiance must be to the public. The auditing profession serves as the public protector of the integrity of financial statements, upon which rests public confidence in our financial markets."^[15]

The bottom line is: We are one accounting profession. And while some of us serve the public sector and others serve the private sector, both sectors benefit from the other's value creation and activities. In fact, the public and private sectors are so highly connected that when there are accountability and integrity failures in either area, the negative effects most often flow to the other — with the potential of seriously impacting the economic livelihoods, economic security, and general well-being of every American.

PCAOB's Role in Protecting Investors and the Public Interest

Given this vital role that accountability professionals play in U.S. markets, it is not surprising that the U.S. Congress, over the last half century, followed the profession closely and finally in 2002, established the first independent audit regulator in the world.

As I mentioned earlier, the PCAOB was created by the Sarbanes-Oxley Act of 2002 in the wake of a series of financial reporting and auditing scandals that wreaked havoc in the U.S. financial markets. These events prompted Congress to strengthen corporate integrity and accountability; end more than 100 years of self-regulation by the public accounting profession in the U.S.; and establish the PCAOB and a regulatory framework for accounting firms that audit the companies whose securities trade in the U.S. markets.

The statutory mission of the PCAOB is to oversee the audits of public companies to promote investor protection and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB is also charged with overseeing the audits of brokers and dealers under federal securities laws.

In July 2010, Congress decided to strengthen the regulatory oversight of securities industry auditors after the revelation of the Ponzi scheme operated out of Bernard L. Madoff Investment Securities. The Dodd-Frank Wall Street Reform and Consumer Protection Act authorized the Board to establish a program to inspect the auditors of brokers and dealers that are registered with the SEC.

The PCAOB is responsible for carrying out four primary oversight functions:

1. registering public accounting firms that audit public companies or broker-dealers;
2. inspecting firms and their audits of public companies and broker-dealers;
3. investigating and enforcing compliance by firms with applicable laws, rules, and standards in those audits; and,
4. establishing auditing and other professional standards.

Registration

The Sarbanes-Oxley Act and PCAOB rules require all U.S. and non-U.S. accounting firms to register with the Board if they prepare or issue audit reports or play a substantial role in preparing or issuing audit reports of issuers, brokers or dealers.

Currently, about 2,360 firms are registered with the PCAOB, including about 915 non-U.S. firms located in 85 jurisdictions.

Not all PCAOB-registered firms regularly issue audit reports for issuers, but we inspect those that do — approximately 714 firms, including more than 240 non-U.S. firms. Additionally, approximately 118 registered firms do not regularly issue audit reports for issuers; however, they report that they play a substantial role in the audits of issuers.

Together, these firms audit or play a substantial role in the audits of the previously mentioned more than 9,755 U.S. issuer companies that have approximately $26.4 trillion in global market capitalization.

Based on 2012 year-end data, the four largest registered public accounting firms and their global affiliates audited more than 98 percent of the global market capitalization of U.S. issuers. The next three firms and their global affiliates audited another 1.1 percent of this market capitalization.

This level of concentration, which has increased significantly since the 1980s, has been studied extensively. The dynamics of this market provide complexities for the Board's oversight programs and present challenges within the market for choice among audit firms.

On the broker-dealer auditor front, approximately 825 registered firms reported that they audited brokers and dealers in 2012, including approximately 511 that reported that they do not audit issuers.

Currently 923 firms are registered with the PCAOB even though they do not conduct audits that would subject them to mandatory PCAOB registration. The Board is examining the extent of this practice and the risks that may arise from gaps in expectations about what a PCAOB registration may signify.

Inspections of PCAOB-Registered Firms

A second area of Board oversight is inspections. We annually inspect firms that audit more than 100 issuers each year. Firms that issue 100 or fewer audit reports each year are subject to inspection at least every three years. PCAOB also inspects certain firms that audit broker-dealers under the Board's interim broker-dealer inspection program, which I will discuss in more detail later.

This year, the PCAOB is inspecting nine firms that audited more than 100 issuers in 2012.^[16] We also currently plan to complete approximately 168 domestic firm triennial inspections and 63 non-U.S. firm triennial inspections this year.

PCAOB inspections are designed to identify and address weaknesses and deficiencies related to how a firm conducts audits. To achieve that goal, PCAOB inspections include an evaluation of the firm's performance in selected audit engagements and an evaluation of the design and operating effectiveness of a firm's quality control policies and procedures.

The review of a firm's work on issuer audit engagements is risk-based and does not cover all of a firm's audits or every respect in which an audit may be deficient. Accordingly, a PCAOB inspection report should not be understood to provide any assurance that the firm's audit work, or the relevant issuer's financial statements or reporting on internal control, are free of any deficiencies not specifically described in an inspection report.

For the large firms, the number of serious audit performance deficiencies we reported spiked in our 2010 inspections, and remained high overall for the large firms in the 2011 inspections. We are starting to see some limited improvements in the 2012 and 2013 inspections. I am hopeful that with the significant audit quality and compliance efforts many firms are putting forth, we will start to see sustainable improvements in inspection results in the next year or so.

If we see significant improvements in the level of compliance with PCAOB professional standards on audits, the Board will have an opportunity to consider adjusting its inspection approach and methodology to take advantage of firms' more effective compliance approaches. The Board is presently working on a project to develop measures of audit quality that could provide useful context for any new approaches.

Common areas where we find audit deficiencies in the large firms include auditing revenue recognition, auditing fair value of hard-to-value financial instruments, auditing management estimates, auditing allowance for loan losses, testing and evaluating internal controls, and the auditor's assessment of and response to fraud risk, among others.

Those same areas, along with auditing related party transactions and auditing share-based payments and equity financing instruments, also pose difficulties for the smaller firms.

On Feb. 25, 2013, the Board released a report summarizing observations identified in the 2007 through 2010 inspections of U.S.-based triennial firms.^[17] That report did show some improvements in overall inspection results for the smaller firms when compared to the 2004 through 2006 period.

In addition to audit performance deficiencies, a second category of inspection findings deals with deficiencies identified in the firm's quality control system. These findings focus on deficiencies in the firm's overall system of quality control such that the system may not provide reasonable assurance that professional standards are met. These quality control findings may have caused audit performance deficiencies, as well as issues in other aspects of the firm's management of its audit practice that could negatively impact a firm's audits.

Examples of quality control deficiencies that appear in the nonpublic portion^[18] of inspection reports include problems in the areas of firm management structure and processes (including "tone at the top"), expertise, professional skepticism, supervision, internal inspections and firms' monitoring of quality, as well as other systemic issues related to specific audit areas.

We meet regularly with the large firms about their remediation efforts and processes for improving audit quality. We have had frank discussions with the top leadership at the firms about these issues, including their:

• tone at the top and firm culture;
• messaging to staff and audit clients on audit quality;
• staff training and development;
• management initiatives;
• partner management and incentives;
• application of professional skepticism on audits;
• overall human capital programs (including diversity and inclusiveness, retention programs, and staff utilization);
• firm monitoring programs (internal inspections and quality assurance);
• quality assurance over work performed by global affiliates and others; and,
• remediation efforts for specific deficiencies noted through inspections.

With regard to the smaller firms, PCAOB staff are available to work with individual firms in a constructive manner to provide information and guidance about appropriate quality control deficiency remediation efforts, depending on the specific deficiencies and issues within a firm.

To the extent that Board inspections find improvements in firms' ability to design and effectively implement quality control systems that provide reasonable assurance of compliance with PCAOB professional standards, the Board may have an opportunity to adjust its inspection approach and methodology to take advantage of those improvements in the future.

Interim Broker-Dealer Audit Inspection Program

In addition to public company audit inspections, the Board is currently conducting an interim broker-dealer audit inspection program, which has been in place for almost two years, and will help us design a permanent program.

There are approximately 4,280 brokers and dealers that filed audited financial statements with the SEC for fiscal periods ending during 2012.

The Board issued its first summary report on the interim inspection program for audits of SEC-registered brokers and dealers on Aug. 20, 2012. The report, which is available on our website, details the findings from inspections of 10 audit firms and portions of 23 of their audits of SEC-registered brokers and dealers.^[19]

PCAOB inspectors identified deficiencies in all of the audits inspected. Even with this small group of audits, the inspection results are disturbing. The deficiencies fell into three broad categories: (1) audit procedures over customer protection and net capital requirements, (2) audits of financial statements, and (3) auditor independence.

Next month, we will issue another summary report on our most recent inspections of broker-dealer audits. Unfortunately, we continue to find significant problems of a similar nature with these audits.

Enforcement Activities Involving Firms and Individual Auditors

As for the Board's third oversight area, a strong enforcement function is essential to the Board's fulfillment of its investor protection mission. To that end, the Board has developed a robust, active enforcement program that seeks to identify potential cases of serious auditor misconduct, investigate them thoroughly and promptly and, where appropriate, institute disciplinary actions.

The overriding goal is to ensure that auditors who commit serious violations of our auditing standards face appropriate and real consequences. The Board is empowered to impose a range of remedial and disciplinary sanctions against registered accounting firms and associated persons who violate applicable laws, rules, and professional standards.

The Board's Enforcement Division currently has about 90 open informal inquiries, formal investigations, and litigated disciplinary proceedings in process — all nonpublic under conditions imposed in the Sarbanes-Oxley Act.

Professional Standards

The PCAOB is uniquely positioned to use its insight from inspection and other oversight activities to improve existing auditing, independence, ethics, and quality control standards to support high quality audits.

As we look at what the PCAOB has accomplished through its fourth oversight area — standard setting ­— and what still needs to be done, we also have taken on an ambitious project to enhance the framework for our standard-setting process. The following standard-setting projects are on our current agenda:^[20]

• a framework for reorganizing PCAOB auditing standards;
• related parties and significant unusual transactions;
• the auditor's reporting model;
• the auditor's responsibilities with respect to other accounting firms, individual accountants, and specialists;
• audit transparency: the identification of the engagement partner and other public accounting firms or persons who are not employed by the auditor but participate in the audit;
• audits of brokers and dealers;
• going concern;
• quality control standards, including assignment and documentation of firm supervisory responsibilities;
• auditing accounting estimates, including fair value measurements and related disclosures;
• auditor independence, objectivity, and professional skepticism; and,
• confirmations.

The Current State of Auditing and Audit Quality

As I mentioned earlier, a top priority of the Board involves a project for assessing and tracking audit quality. Ten years after the establishment of the PCAOB, we have been asked, "What is the present state of audit quality?" and "Has audit quality improved since the enactment of the Sarbanes-Oxley Act?"

I, along with many stakeholders and members of the profession, believe that audit quality has improved. PCAOB inspections, however, continue to show serious audit deficiencies in public company audits on a regular basis.

This discrepancy points out a glaring issue: A generally understood and measurable definition of audit quality has not emerged over the decades that this issue has been debated and questioned.

To that end, the Board has made it a 2013 priority to begin a project to identify audit quality indicators. A longer term goal is to track such measures for domestic global network firms^[21] and report on those measures over time. This project is well underway and will include the identification of audit quality indicators in the areas of audit process and results, as well as the development of methods to objectively measure those indicators.

The 2008 Department of the Treasury's Advisory Committee on the Auditing Profession (ACAP) raised the issue of audit quality indicators at the outset of the recent financial crisis. The committee recommended that the PCAOB study the feasibility of developing key indicators of audit quality and effectiveness.^[22]

And, earlier this year, the International Auditing and Assurance Standards Board (IAASB) issued a consultation paper on a proposed framework for audit quality that sets out key attributes that are conducive to audit quality.^[23] In addition, individual audit firms and the Center for Audit Quality also are working on similar initiatives.

Currently, there is a constructive level of collaboration and cooperation among the various stakeholders in pursing the objective of reaching a common view of audit quality and developing related measures.

Independence, Objectivity, and Professional Skepticism

Another priority issue for the Board is the consideration of how to improve auditor independence, objectivity and professional skepticism.

The profession, regulators, and other stakeholders agree that auditors must be independent, objective, and professionally skeptical. Yet, the PCAOB, like a number of other regulators around the world, continues to find instances in which it appears that auditors did not approach some aspect of an audit with these required professional disposition and distance from the client.

For example, a recent PCAOB Staff Audit Practice Alert^[24] describes observations from PCAOB's oversight activities that raise concerns about whether auditors consistently and diligently apply professional skepticism. The Alert identifies several challenges that auditors may confront when trying to exercise professional skepticism, such as cognitive biases, business pressures and incentives, and other environmental factors present in an audit context.

It also points out some factors that contribute to the application of professional skepticism in audits: an effective system of quality control within the audit organization, including an appropriate tone at the top, properly aligned incentives and performance evaluation systems, and professional competence of firm personnel, as well as effective supervision.

Opportunities for "Bigger Thinking"

As my final thought, I'd like to briefly engage you on the theme of this conference, "Big Challenges, Bigger Thinking." The "big challenges" are before us each day and take lots of our time and energy. It's the "bigger thinking" piece that requires us to step back, think critically and creatively, and then take action if we are to effectively meet the challenges.

To be frank, we accountants and auditors need to shed the stereotype that the very nature of our profession is incompatible with innovation, and the myth that innovation cannot coexist with oversight and regulation.

Some have even asserted that innovation in the profession likely ended with the introduction of double-entry bookkeeping. To be sure, there are technical aspects of what we do that cannot be fiddled with. But while the creation of the PCAOB ended more than a century of self-regulation by the U.S. public accounting profession, regulatory oversight is not a mandate to end or discourage the thought leadership of which this profession is so very capable.

In fact, I believe it is needed more than ever.

Before we delve into the "bigger thinking," let's look at the big picture. As financial reporting and auditing professionals in government, you are at the nexus of government performance and accountability to taxpayers and the debt markets. In the private sector, financial reporting and auditing professionals provide accountability to investors and other stakeholders on the results of business performance. We all help make the securities markets work. We have the awesome responsibility of protecting investors, the public interest and American prosperity.

Yet, now and again, after a scandal involving accounting or reporting misconduct or abuse, someone will question the relevance of accounting or auditing and even ask if what we do really matters. The answer to that is an emphatic "yes." And I say that, not only as a regulator, but as an investor and a citizen, as well.

Our use of "bigger thinking" as a profession is critical, given the challenges we collectively face and our duty of protecting the public interest.

Across history and around the world, a common characteristic of economies that flourish is the presence of reliable financial reporting. When market participants do not have sufficient confidence, markets cease to function efficiently, businesses fail to thrive, and prosperity becomes an elusive goal. Yet a necessary precondition for readily available and reliable financial reporting is a vibrant and robust accounting profession.

We need to work collectively to help ensure that we have a strong accounting profession that is well poised to meet current and future challenges with integrity, while adding value and serving the public interest. We will achieve this through our people, our performance, and adherence to core values.

At the most fundamental and basic level, we must care about the human capital — the people — of the profession. We need to continue to attract and retain high potential individuals with high levels of integrity and drive.

Further, an area where the profession needs to place particular focus continues to be the development of a diverse workforce at all levels, but especially in leadership positions. I am dismayed by the slow progress in this area.

Unfortunately, in some cases, there seems to be a passive mindset of acceptance of the status quo because allegedly "achieving diversity is difficult." Our profession needs the views and experiences of a diverse workforce to keep pace with the increasingly global and complex demands and challenges of the future.

As the Treasury ACAP report noted, the accounting and auditing profession must keep pace with the demographics of the global economy and present itself as open and representative.^[25] Even more starkly, last year, the Pathways Commission of the American Accounting Association and the American Institute of Certified Public Accountants concluded that "the failure to attract and retain qualified entrants [into the profession] that reflect the diversity within the population will negatively impact the profession in a significant way."^[26]

But self-preservation alone is an insufficient cause for action in this area. I firmly believe that a diversity of perspectives, backgrounds, and skills can improve performance.

In another area of "bigger thinking," we need to structure accounting education programs to engage and retain the strongest possible community of students, academics, practitioners, and other knowledgeable leaders to educate the future pipeline of entrants into the accounting profession. The Pathways Commission recently published an extensive study, Charting a National Strategy for the Next Generation of Accountants, which contains many recommendations in this area.

In both financial reporting and auditing, members of the profession need to adopt a culture of continuous learning in an environment of constant change. Doing things because "that's the way they've always been done" will simply not work. To achieve reliable financial reporting and provide value, members of the profession need to constantly absorb new information and appropriately respond to that information.

Because I have been an auditor most of my professional career, I feel particularly compelled to issue a call for auditors to perform with the highest levels of independence, integrity and objectivity, while adding value through their objective analysis, professional judgment, and high performance.

Auditors must remember who their clients are. In the public sector, the clients are the taxpayers. In the private sector, the clients are the investors. And auditors in both sectors need to remember their duty to the public interest.

In both financial reporting and auditing, technical proficiency and expertise are essential. But we must recognize and accept the critical nature of skeptical thinking and the application of judgment, in combination with the professional and personal confidence and expert communications skills to "push back" in the face of resistance and maintain objectivity and independence when faced with pressures.

Finally, we need to achieve nimble and effective regulation and oversight that uses a forward-looking and proactive approach. For example, the PCAOB is using technology to acquire, integrate, analyze, and maintain data for its oversight programs to respond to changing risks and market dynamics.

As I suggested earlier, I believe we could do more to consider adjusting our programmatic approaches and methods to address trends and emerging issues. As a complement, the PCAOB also is studying ways to incorporate principles of economic analysis more fully into our oversight programs. This should contribute to a more effective and efficient regulatory impact on audit firms as well as make a positive impact upon internal PCAOB oversight programs and activities.

These are just a few of the areas where the profession needs "bigger thinking" for some of our big challenges. Many of these challenges are evergreen in nature and will need constant effort and action to monitor and adjust as circumstances change. I am confident that this audience is up to the task.

As I close, I want to first acknowledge the very difficult and important job that you all do on a daily basis. I also want to encourage you to remain dynamic, creative, nimble, and vigilant to monitor current risks, anticipate future problems and mitigate them in the interest of the well-being of our citizens.

Thank you for your service to our country and our profession.