Statement on Concept Release on Potential Approach to Revisions to PCAOB Quality Control Standards
Thank you, Mr. Chairman. I fully support the Concept Release on a Potential Approach to Revisions to PCAOB Quality Control Standards.
As I like to say, the PCAOB's current quality control standards have been around since my hair was a different color and there was more of it. However, audit firms and the audit environment where they operate are different now. Firm use of technology has evolved and expanded. Management and organizational structures have changed. There are different practice structures and more use of international networks. Although these developments affect audit practices and the quality control systems that support them, our current standards do not necessarily account for them. It is time to take a fresh look at our quality control standards and update them where necessary.
There are many ways to define quality, including degree of excellence, freedom from defects, conformance to requirements, and fitness for use. Under any of these definitions, an audit firm with an effective quality control system will consistently perform high quality audits. Although the U.S capital markets drive our mandate, to achieve such consistency across global networks, it is crucial that all firms in the network start from the same place. I support the approach of using the International Auditing and Assurance Standards Board's recently proposed standard as the starting point.
Of course, there may be differences as appropriate for firms performing engagements under PCAOB standards and rules. However, requiring a global network of firms to implement markedly different sets of quality control standards would not advance audit quality. In fact, unnecessary differences in quality control standards could impede the advancement of audit quality.
We must also develop standards that are nimble and scalable for all registered firms. Scalability will allow a firm to tailor its quality control system based on its size, complexity and nature of the audits it performs.
I also support the use of a concept release to begin this standard-setting process and commend Megan Zietsman, our Chief Auditor, and her team for recommending it. Starting with this vehicle, instead of a proposed standard, confirms the Board's commitment to enhancing transparency and accessibility through proactive stakeholder engagement. We will engage our stakeholders earlier in the standard-setting process, allowing us to hear and consider all views as we move forward.
Finally, I also want to thank Megan and her team, and all of our divisions and offices who contributed to this concept release for their hard work and dedication. Thank you, as well, to our colleagues at the Securities & Exchange Commission for their feedback and oversight.
I look forward to hearing from our stakeholders on this important project.