Thank you, Mr. Chairman and thank you for convening today’s open meeting. I also want to express my gratitude to Ken [Lench] and John [Cook] for their presentation today, and others in our General Counsel’s Office for their work on today’s proposal. I fully support the adoption of the proposed Standards Advisory Group Charter.
As the Chairman has already discussed, the Standards Advisory Group will complement and build upon our ongoing outreach efforts. Our outreach efforts began in 2018 before I arrived at the Board, and I credit my predecessor and current Board Members and our dedicated staff for launching this initiative. Since I joined, the PCAOB has continued to pursue its outreach goals through one-on-one calls, roundtables, presentations, and Spotlight documents highlighting timely issues and topics. Our outreach has allowed us to hear from many stakeholders, including investors, financial statement preparers, and more than 700 audit committee members in the last two years. This diversity of perspective has been invaluable, and the relationships we have built have enabled us to stay in touch with stakeholders during the pandemic, learn about the challenges that they are facing, and issue publications specifically addressing those challenges.
The Charter makes the mission of the Standards Advisory Group clear. The Standards Advisory Group will give us an opportunity to get focused advice on the PCAOB’s standards, and improve the PCAOB’s standard-setting process. As our Research and Standard-Setting Agendas show, we have a number of projects where we expect to reach milestones within the next 18 months, and we are excited to have the Standards Advisory Group work with us as we move forward. I personally think that our audit evidence standard is a great opportunity for this Group to use their knowledge and expertise to help us understand what investors, preparers, auditors, and others are seeing in the field. I would welcome any recommendations from the Group on how to modernize our standard. At a time when firms are beginning to use sophisticated software analysis and other technology-based tools as part of their audits, our standard still refers to facsimiles. I want to make sure that we are facilitating and encouraging the use of technology that will improve audit quality.
The tasking mechanism is a particularly important aspect of the new Standards Advisory Group. Rather than providing information on a wide variety of topics, as our outreach efforts do, the Standards Advisory Group will be able to focus on particular issues, dive deeply into those issues, and work on those issues on a longer-term basis. The Standards Advisory Group will address the issues where the PCAOB will benefit most from the Group’s focused energy. Additionally, the tasking process includes a mechanism for the Standards Advisory Group to provide reports, presentations, or other deliverables that we can consider and incorporate into our rulemaking process.
I am also pleased with the composition of the Standards Advisory Group. As John [Cook] described, the Group will consist of investors, audit committee members or directors, financial reporting oversight personnel, academics, others with specialized knowledge, and audit professionals. The diversity of experience that this group offers will be invaluable. Additionally, having investors included in the same group as other participants who are focused on audits and financial reporting will allow the investors to share their opinions with the group from the beginning of the process, ensuring that investors’ voices are heard as part of all discussions. I believe that this combined group will facilitate more effective input from investors than the PCAOB would receive if we maintained two separate groups. As the Charter makes clear, we encourage maximum participation by investors.
The revisions to our Advisory Group Charters are an important part of our evolution as an organization. We are grateful to everyone who served on the Standing Advisory Group and the Investor Advisory Group. We hope to have the opportunity to hear from each of you in the future.I also want to emphasize that the Standards Advisory Group is additive. Our stakeholder outreach will continue. I am excited to work with the new Standards Advisory Group and to continue to participate in our stakeholder outreach, and I applaud all of the work that Erin Dwyer has done to date. At the PCAOB, we have an open door policy, and I would encourage anyone who has feedback for the PCAOB to reach out to us.