Chair Williams’ Statement on the 2024 Budget

Remarks as prepared for delivery

I am pleased to support the 2024 budget that provides us with the funding necessary to execute our investor-protection mission.

That work is guided by the goals and objectives set forth in the 2022–2026 strategic plan that the Board approved last year. Under this plan, we have made great strides over the last year in protecting investors through our oversight activities. The 2024 budget will enable the continued advancement of these efforts led by the PCAOB’s talented and dedicated staff.

The strategic plan is built around four key goals, each of which is essential to meeting our investor protection mission: Modernizing Standards, Enhancing Inspections, Strengthening Enforcement, and Improving Organizational Effectiveness.

From a modernizing standards perspective, the Board has taken more formal actions on standard setting and rulemaking this year than any year in the last 10, issuing four proposals — with one more expected to be considered before year’s end — and adopting a final confirmation standard and related amendments that had previously been stalled since 2010. By the end of 2023, we expect to have considered five proposals — more than in any single year in PCAOB history since the first set of standards and rules were proposed in 2003. This budget provides the funding to continue to build upon this momentum in 2024 as evidenced by the recent updates to the Standard-Setting, Research, and Rulemaking Agendas.¹

We continue to take actions that enhance our inspection efforts. This year we began including information about independence and other matters in our inspection reports. And we expanded the tools available on our website to make it easier to find and compare deficiency rates across audit firms. The 2024 budget includes the resources necessary to continue to drive inspection activities in support of our mission to protect investors.

Last year through our enforcement program we imposed the highest penalties in PCAOB history against those who put investors at risk. This week we surpassed that record with $11.9 million in penalties against wrongdoers — and the year is not over. Our 2023 penalties are already more than double the total penalties in each of the five years before our record-breaking year in 2022. This budget provides us with the resources to continue to strengthen our enforcement program as we use all the tools in our toolbox to conduct investigations and bring enforcement actions to protect investors and drive deterrence.

We must be good stewards of the fees collected to fund the PCAOB. This means making sure our organization operates as effectively as possible.

The Board recognized this fact in our strategic plan where we said, “Investing in our staff and enhancing our stakeholder engagement will improve both our overall organizational effectiveness and our efforts to meet our mission.”

To improve organizational effectiveness, we have reimagined our approach to stakeholder engagement, including creating the Office of the Investor Advocate this year. At the same time, we are investing in well-functioning internal processes, information technology capabilities, and highly skilled staff.

Let me be clear: nothing we do to protect investors is possible without the talented and dedicated staff of the PCAOB. And nothing is more mission-critical than the people we depend on to meet the mission.

It is appropriate then that approximately three-quarters of this budget relates to compensation, which is also consistent with past budgets. This budget properly provides our staff with competitive compensation that is both worthy of their hard work and necessary for the PCAOB to continue to retain and attract the top talent this work requires.

The budget reflects an additional net of 20 positions, which is both modest and essential to advance our oversight activities, either directly or through their support function. Half of these new positions will reside in our Division of Registration and Inspections and will restore the total number of staff in this division back to an amount comparable to our 2016 and 2017 budgets, before the number of inspectors were reduced to a level below what our experts tell us is necessary to effectively protect investors today.

We are currently seeing an increase in deficiency rates for the second year in a row. Being responsible stewards of the fees collected to fund our work requires us to meet this moment and make the investments necessary to protect investors.

We cannot justify simply maintaining the status quo. We owe it to investors to provide our staff with the tools they need to successfully drive audit quality forward.

In closing, I would like to thank everyone who played a role in finalizing the 2024 budget. I would like to specifically thank my fellow Board Members and PCAOB staff for their collaboration on developing the strategic plan. I would also like to recognize our Chief Operations Officer, Jamey McNamara, our Chief Financial Officer, Holly Greaves, our Budget Officer, Jim Hearn, and the rest of their team — Yoss Missaghian, Alfredo Azocar, Marcia Saavedra, and Lorene Rosenberg — along with the leadership of each of the divisions and offices for their efforts on the budget.

Lastly, I would like to thank the Commissioners and staff at the Securities and Exchange Commission for their support and guidance.