Chair Williams’ Testimony Before U.S. House of Representatives Committee on Financial Services Subcommittee on Capital Markets

Public Company Accounting Oversight Board (PCAOB) Chair Erica Y. Williams testified before the House Financial Services Subcommittee on Capital Markets today regarding the PCAOB’s mission and agenda.

The testimony Chair Williams’ delivered before the committee is below. Her complete written testimony for the record can be found HERE.

Remarks as prepared for delivery 

Thank you, Chairman Wagner, Ranking Member Sherman, Chairman McHenry, Ranking Member Waters, and members of the subcommittee. I am grateful for the opportunity to appear before you today and discuss our shared commitment to protecting investors on U.S. markets.  

I am obligated to note that I am testifying on behalf of myself as Chair of the PCAOB, and my comments do not necessarily reflect the views of other Board members or PCAOB staff.  

I want to start by thanking you for your commitment to holding China accountable.  

Because of the leadership of the U.S. Congress in passing the Holding Foreign Companies Accountable Act, the PCAOB secured complete access to inspect and investigate registered public accounting firms in China for the first time in history. 

As a direct result of that access, the PCAOB recently announced historic enforcement actions against China-based audit firms and individuals.  

The days of China-based firms evading accountability are over. Our work holding firms in China accountable is just beginning.   

Investors in U.S. markets are more protected today because of Congress’ leadership. Thank you for your ongoing efforts. 

My path to the PCAOB starts with my grandmother. She and my grandfather were farmers in Alabama. And she quite literally kept what little money she had under her mattress.   

She didn’t trust it to a bank, let alone the stock market.   

The problem with money under the mattress is that it doesn’t grow. Building wealth requires investing, and investing requires trust.  

So, when I became the first person in my family to go to law school, I chose to go into securities enforcement to hold wrongdoers accountable, and help bolster the integrity of, and breed confidence in, our capital markets.   

I am proud to continue serving the interests of investors at the PCAOB.  

As with our work in China, protecting investors drives everything we do – from workers saving for retirement in Missouri; to families investing in California; to businesses creating jobs in North Carolina because they can raise money through sound, liquid markets;  to anyone across this country who depends on the integrity of U.S. capital markets to realize their version of the American dream.  

Quality audits protect people. And protecting people is the PCAOB’s mission.  

We have three key tools to accomplish that mission: standards, inspections, and enforcement. 

When the PCAOB was first getting off the ground in 2003, it adopted existing standards that had been set by the auditing profession on what was intended to be an interim basis. Unfortunately, far too many have not been significantly updated in at least 20 years. 

Our capital markets don’t stand still. They evolve constantly. Practices change. Technology advances relentlessly. And new risks emerge. 

To keep investors protected, our standards must keep up – which is why we are working to advance an ambitious agenda to modernize PCAOB standards and rules.  

The public comment period is an absolutely essential part of that process, and we carefully weigh each and every comment we receive.  

At the same time, our Inspections Division is also hard at work. 

Our teams inspect roughly 800 audits in more than 30 jurisdictions around the world each year.  

This year, we enhanced our transparency by including a new section on auditor independence and a range of other improvements in our inspection reports. And we rolled out new features on our website to help users access and compare inspection report data. 

Finally, we are strengthening our enforcement program to ensure accountability, promote deterrence, and protect investors. 

Last year, we imposed the highest penalties in PCAOB history. This year, we have nearly doubled that record.    

Our capital markets are the envy of the world. And they are fueled by investor confidence.  

The role of auditors is to bolster that confidence by providing investors with assurance that the financial reporting they rely on to make decisions is accurate.  

The role of the PCAOB is to hold auditors accountable for living up to that responsibility. 

I am proud of the work we are doing every day on behalf of investors. And I look forward to taking your questions.