Opening Remarks

I want to join my colleagues in welcoming the members of the Investor Advisory Group to today's 2011 meeting of the IAG.

As Steve has already noted, the Sarbanes-Oxley Act created the PCAOB to protect the interests of investors and further the public interest in the preparation of informative, fair and independent audit reports and reliable financial reporting. Nevertheless, integrating the needs and goals of investors into our work is sometimes a challenge. We often hear from accounting firms, and preparers of financial statements. However, we receive much less input from the intended beneficiaries — investors. This Advisory Group is one of the ways the Board tries to balance the scales.

For each of you, the time you spend advising us on how to more effectively do our job is time that is necessarily taken away from your own jobs and families. We value your input and are grateful for your participation in the IAG.

I also want to join Steve and Jim in thanking Chairman Schapiro, and SEC Chief Accountant Jim Kroeker and Deputy Chief Accountant Mike Starr, for being with us this morning. The Board's role in furthering investor interest in reliable financial reporting is just a subset of the Commission's much broader investor protection mandate. I know how great the demands on your time and attention are, and I appreciate your support for the Board's work and for this Advisory Group's mission.

I want also to underscore that this meeting would not be taking place if it weren't for Steve Harris's commitment to the success of the Advisory Group. Since joining the Board more than two years ago, Steve has made it a crusade to ensure that the Board does everything it can to make investor views part of its decision-making. The IAG is one of the tangible results of Steve's efforts.

The three topics on the Advisory Committee's agenda today are the audit-related lessons of the financial crisis; possible changes in the nature and scope of the auditor's report; and the implications of global networks for audit firm governance. Each of these raise issues key to the Board's work, and each could certainly occupy the entire day — and more.

I am especially interested in the group's views on changes to the reporting model — that is, whether we should be asking auditors to provide more information than appears in the traditional, standardized audit opinion and, if so, how the auditor's communications with financial statement users should expand.

The Board has begun a project in this area, and we will be discussing it at a public Board meeting next week. There is considerable investor hunger for more insight from the auditor regarding both the audit process and the qualitative aspects of the company's financial reporting. However, going beyond the time-honored pass/fail audit report would raise some challenging issues. It would be a fundamental change in the auditor's role and could have far-reaching implications for the nature and extent of the audit work underlying the report. The Advisory Group's ideas about how we should go forward with this complex and important project will be particularly valuable.

Thank you, and I am looking forward to the rest of today's discussion.