Statement on the PCAOB 2020-2024 Strategic Plan and 2021 Budget

Thank you, Mr. Chairman. I fully support the PCAOB's 2020 to 2024 Strategic Plan and the 2021 Budget.

I want to welcome Megan Zietsman to the Board. Megan was a great team member in her capacity as the PCAOB's Chief Auditor, and I am so glad that she is joining the Board. I'd also like to thank Jim Kaiser for his service to the PCAOB. I've benefited from his incredible expertise and his ability to find common sense solutions to challenging issues, and importantly his friendship. Jim, your contributions to advancing audit quality, our strategic goals, and our transformation cannot be overstated, and I sincerely thank you.

Regarding our budget, I believe we have taken a thorough approach to evaluating the resources necessary to continue our important work to achieve the goals outlined in our strategic plan. Meeting the needs identified in our budget will allow us to effectively and efficiently fulfill our statutory mandate. Our transformational activities have, and still are, focused on improving the effectiveness of our operations. The success we have achieved allows us to do more with our resources, which in turn has allowed our 2021 Budget to stay relatively flat.

The budget also appropriately reflects our current operating environment, including the impact of COVID-19. Our staff have been successfully working from home since March. I am pleased that we were able to successfully transition to a remote environment with minimal disruption due, in part, to the incredible efforts of our Office of Data, Security, and Technology and the dedication of all PCAOB staff. A modest increase in our ODST expenses is included in the budget to further improve our operational efficiency, including enhancing our ability to conduct our oversight activities remotely.

During 2020, we continued to build on the transformational activities that began in the prior year, and we have made important progress towards achieving our goals. I'd like to focus on just a few of our achievements over the last year.

In 2019, we took steps to enhance our stakeholder engagement, and in 2020 we've made great strides towards achieving this strategic goal. Our external engagement took many forms in 2020, and despite our "new normal" we have followed through with our commitment to engage with our stakeholders. For example, we recently hosted investor and preparer roundtables, which were facilitated by our Office of External Affairs. We have also continued our extensive outreach efforts to audit committee members. I believe that the relationships that we built with our stakeholders prior to the pandemic have allowed us to continue those relationships during the pandemic, receive feedback from key stakeholders, and release guidance and information to stakeholders during this time. Although we have come a long way, we still have work to do, and I look forward to working with my fellow Board Members to continue our external engagement in 2021.

One important aspect of our goal to improve audit quality is our standard-setting activity. During 2020, we modernized our Standard-Setting Agenda and our Research Agenda to focus on projects where we believe we need to take action in the near term to advance audit quality. Our Standard-Setting and our Research Agendas now list only the projects where the Board expects that a public milestone will be reached in the next 12 to 18 months. The PCAOB's new approach to signal to the public what our priorities are, I believe, will be beneficial in a number of ways. It is a way for us to let the public monitor our progress on our standard setting activities, and it holds us accountable to achieving our objectives in the timeframe. Furthermore, I believe it is important for us as a regulator to be able to prioritize projects to advance our mission. With a targeted approach, we can and will update critical standards in a timely fashion. Once we accomplish the current plan, we will of course, forecast the future set of priorities. Our Standard-Setting Agenda currently includes projects on independence, which we are voting on today, quality control, and the supervision of audits involving other auditors.

We have also focused our Research Agenda on two projects—audit evidence and data and technology—that I believe are critically important. Those research projects are focused on evaluating whether there is a need for guidance, changes to standards, or other regulatory actions in light auditors' and preparers' increased use of technology-based tools. Innovations in these technologies have the potential to improve the efficiency and effectiveness of the audit, and the PCAOB needs to ensure that our standards continue to be relevant in light of the development, adoption, and use of these technologies. Additionally, our Office of the Chief Auditor continues to monitor other important issues affecting audit quality, performs research on these issues, and considers whether these issues should be moved to our Standard-Setting or Research Agendas. In light of these and other efforts, I am pleased to support the additional resources for our Office of the Chief Auditor reflected in the 2021 budget.

As our largest division, the Division of Registrations and Inspections has contributed greatly to our transformational effort, and I commend our Inspection and Registration Staff for their dedication to our Strategic Plan. As I reflect on our activities over the last year, I am encouraged by changes in our inspection program that will advance audit quality, including streamlining our inspection procedures. This year, we also reformatted our inspection reports to, among other things, provide more useful information to users. Now that the hard work of restructuring our inspection reports has been completed, we are committed to communicating inspection results on a timelier basis. Improving the effectiveness and efficiency of our report writing process, for example, will allow our staff to focus on new projects to advance audit quality.

It's through all of our successful activities to date, that we can do more without significantly expanding our budget. I believe the modest increase, of less than one percent, to our 2021 budget appropriately reflects the current economic climate and the Board's commitment to prudent fiscal governance.

In closing, I would like to thank the staff in our Office of Administration for bringing this budget forward and all PCAOB employees for their dedication to our transformation and our mission. I would also like to thank the SEC staff for their efforts on this budget. I approve its submission to the SEC along with our five-year strategic plan.