Statement in Support of the Board’s 2025 Budget

Remarks as prepared for delivery

Thank you again, Chair Williams.

I served as staff at the PCAOB for 20 years before I became a Board Member. This experience has provided me with a comprehensive vantage point from which to evaluate the Board’s undertakings and an appreciation for the complexity of building the organization’s budget each year from the ground up. Put simply, the PCAOB’s budget is crucial to protecting investors, maintaining market integrity, and ensuring the reliability of financial reporting.

There are two principles that guided me as I evaluated the budget before us today, which are the same as those I employed in reviewing last year’s budget. First, does this budget include the appropriate level of resources to allow us to execute on the PCAOB’s mission and strategic plan? And second, and of equal importance, is the PCAOB using the resources we have been allocated wisely in pursuit of our mission?

I am confident this budget before us satisfies both those principles. The headcount included in the budget reflects the needs of each of our divisions and offices and is consistent with 2024 levels. And the budget promotes the careful stewardship of the funds with which we have been entrusted.

I would like to emphasize four areas the 2025 budget will support.

First, although the PCAOB’s staffing complement of 945 individuals is consistent with the current budgeted headcount, I believe it will allow the organization to effectively perform all our oversight activities throughout 2025. In particular, the staffing level of our largest division, the Division of Registration and Inspections, will ensure that our inspectors are able to meet the requirements mandated by the Sarbanes-Oxley Act and that we are addressing all appropriate risks in an efficient and effective manner.

Second, in 2022, the PCAOB secured complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. This historic and unprecedented access was only possible because of Congress’s passing the Holding Foreign Companies Accountable Act. As a result of this, our inspectors and enforcement staff, supported by the staff of the Office of International Affairs, have been conducting inspections and investigations of accounting firms headquartered in mainland China and Hong Kong since 2022. Our access to mainland China is exceptional among U.S. financial regulators, and among audit regulators worldwide. It is a significant step towards improving the transparency and accountability of Chinese companies listed on U.S. exchanges and supports the integrity of our markets. The budget before us today includes funding to continue these critical activities to protect investors.

Third, as noted in our research project on Data and Technology, auditors are expanding their use of technology-assisted analysis and are making significant investments to implement machine learning and Generative Artificial Intelligence (GenAI) in the performance of their audits. The increasing reliance on technology in financial reporting and auditing necessitates a corresponding investment by the PCAOB in our own technological capabilities to effectively oversee registered public accounting firms. In particular, this budget includes technology investments for the Division of Registration and Inspections, the Division of Enforcement and Investigations, and the Office of Economic and Risk Analysis that are necessary to leverage the efficient work of our staff.

Fourth and finally, in 2025, we will continue our efforts to provide outreach and guidance specific to smaller audit firms. I strongly believe that healthy audit firms of all sizes are necessary to meet the needs of investors and the capital markets. In 2024, we held four Forums on Auditing in the Small Business Environment and on Auditing Broker-Dealers. I was pleased to participate in one of these sessions. I believe that outreach to and hearing from smaller firms is critical to our mission. Over 1,000 individuals registered, either in person or through live-stream, for these events, which allowed them to hear directly from and interact with PCAOB Board Members and staff. This is important work, and I am pleased that the 2025 budget provides resources for five in-person Forums.

In addition to the increased publication of staff Spotlight documents, our staff has recently launched Audit Focus, a series of PCAOB staff publications to provide easy-to-digest information to auditors, especially those who audit smaller public companies, with an eye towards protecting investors and improving audit quality. I am encouraged by our staff’s creativity and initiative to target outreach to smaller firms.

In closing, I want to emphasize that this budget maintains the Board’s current staffing level while making investments in technology and other initiatives that will allow us to work smarter as we perform the critical work of protecting investors and furthering the public interest in the preparation of informative, accurate, and independent audit reports.

I would like to recognize the efforts and dedication of the staff in the Office of the Chief Operating Officer specifically, Jamey McNamara, Holly Greaves, Jim Hearn, Yoss Missaghian, Alfredo Azocar, and Marcia Saavedra.