I am pleased to welcome you to the inaugural meeting of the Public Company Accounting Oversight Board's Investor Advisory Group. The Sarbanes-Oxley Act created the PCAOB to protect the interests of investors and to further the public interest in the preparation of informative, fair, and independent audit reports and reliable financial reporting. Despite that basic mission, understanding the needs and goals of investors with respect to audited financial information is something of a challenge. We often hear from auditors, accounting firms, and preparers of financial statements – and understandably so, since our work affects them directly. However, we receive much less input from the intended beneficiaries of our work — investors.
This group was created to help remedy that state of affairs. We have put together an ambitious and wide-ranging agenda for today’s meeting that touches on some of the major issues that the Board is facing. The topics we will be seeking your views on include –
- Lessons from the financial crisis regarding auditing challenges and the role that the Board's proposed fraud resource center could play in analyzing and preventing future financial reporting and auditing breakdowns.
- The Board's foreign inspections program and the obstacles the Board faces to making that program comprehensive.
- Whether auditing firms should provide greater public transparency concerning their structure and finances and whether there should be changes in the way the firms are governed.
- Whether the auditor’s reporting model should provide greater transparency regarding the audit process.
- Whether there should be changes in the scope and nature of the auditor’s responsibilities.
I am looking forward to hearing your thoughts on how we should be addressing those issues and on what you believe we ought to be doing regarding each to fulfill our statutory investor protection mission.
Before I go further, I want to acknowledge the work that my colleague Steve Harris has done to make this advisory group a reality. We would not be here today if it were not for Steve. Since joining the Board almost two years ago, he has made it a crusade to ensure that we do not lose sight of our responsibilities to investors and that we do everything we can to make sure their views are considered as part of the Board’s decision-making. He has been tireless in pushing for the creation of this advisory group and in orchestrating the agenda to make this inaugural meeting as productive as possible.
I think the Investor Advisory Group is convening at an especially appropriate moment in the Board's life. We have now been in operation for a little over seven years. Much of that time has been devoted to taking the blue-print that Congress gave us in the Sarbanes-Oxley Act and turning it into a functioning organization. While there is still a lot left to do, our Inspections, Enforcement, Standard-Setting and Risk Assessment programs are now well-established and, if not fully mature, at least robust adolescents. It is a good time to step back and ask ourselves how we can overcome the challenges that have emerged along the way and what we can do better in order to improve audit quality and public confidence in audited financial statements. I see this meeting today as an opportunity for that sort of assessment.
We are fortunate to have with us today SEC Commissioner Elisse Walter. This is particularly a treat for me, since Elisse and I go way back. We worked together on the SEC staff in the late 1970s and 1980s. She then went on to service at the Commodity Futures Trading Commission and Financial Industry Regulatory Authority. She has life-long commitment to investor protection and a unique background for turning that commitment into concrete action.
Elisse, thank you for joining us today. I would like to turn to you for any comments you would like to make.