IFIAR Investor Advisory Group Discussion

I would like to thank the members of the International Forum of Independent Audit Regulators (IFIAR) and, in particular, Steven Maijoor and Paul Boyle, for inviting investor participation at today’s meeting.

Since its founding three years ago, IFIAR has held numerous constructive discussions with the largest international accounting networks -- through their Global Public Policy Committee (GPPC) -- PricewaterhouseCoopers, Ernst and Young, Deloitte, KPMG, Grant Thornton International and BDO International. And, now, with today's meeting, we begin an important, even essential, public dialogue with investor representatives, as well.

I think it is fair to say that the primary goal of audit regulators around the world is to protect the interests of investors through effective oversight and regulation of the auditors of public companies. Indeed, the IFIAR charter specifically states that members "[share] the common goal of serving the public interest and enhancing investor protection by improving audit quality globally..."

Protecting the interests of investors by improving the accuracy and reliability of corporate disclosures was the primary objective of the Sarbanes-Oxley Act of 2002 in the United States and is, of course, the mission of the U.S. Public Company Accounting Oversight Board (PCAOB). We work to achieve this through the regulation of auditors.

An essential component of regulating the audit profession is listening to investors' expectations and concerns about audit quality. For this reason, we believe it is important for IFIAR to formalize the Investor Working Group, and organize regular meetings with representatives of the investor community going forward.

Last month the PCAOB established a similar Investor Advisory Group. Its charter states its mission -- to provide a forum through which the PCAOB may obtain “the views and advice of experts who have a demonstrated history of commitment to investor protection.” We expect to announce the inaugural members of the advisory group on Thursday. We also expect that this group – which will meet, at a minimum, twice a year – will generate timely, candid and robust discussions about the work of the PCAOB.

I am equally confident that IFIAR may gain insight into concerns raised by investors worldwide with the help of the investor groups before us today – Jamie Allen, Secretary General of the Asian Corporate Governance Association; Gerben Everts, Compliance Officer for APG Investments; Guy Jubb, Head of Corporate Governance for Standard Life Investments; Jeff Mahoney, General Counsel of the Council of Institutional Investors; and Elizabeth Murrall, Director, Corporate Governance and Reporting for the Investment Management Association.

I want to thank each of these presenters for his and her effort to make this a meaningful discussion. I also want to thank Jeff Mahoney for his leadership in organizing today’s session, as well as Lisa Hunt from the PCAOB International Affairs Office. The topics they will raise are not unfamiliar, but they are crucial to the oversight of the auditing profession.

The discussion will start with "Structural Risks of the Audit Market," focusing on the potential investor impact were one of the largest firms to fail. The panel then will discuss “Audit Quality,” with an emphasis on improving auditor communications with investors about audit quality through an expansion of the auditor’s report. The panel will end with a discussion on “Audit Firm Governance and Transparency,” to consider issues such as requiring audit firms to publish their own audited financial statements, to provide greater transparency about their governance structures, and to appoint independent directors to their boards.

Many of these topics were debated at length by an Advisory Committee on the Auditing Profession established by the U.S. Department of Treasury. Its final report, issued last year, included several recommendations for action by the U.S. Securities and Exchange Commission and the PCAOB. I think it is fitting that investor groups from around the world have chosen to focus on a number of the same issues here today.

Again, I would like to thank the members of IFIAR for creating this opportunity to hear from investor groups, and I look forward to investor participation at future IFIAR meetings. I now will turn the floor over to our investor representatives for their introductory remarks.

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