Statement on Proposed 2012 Budget and Strategic Plan

In February of this year, Chairman Doty, Board Member Ferguson and I were appointed to the PCAOB, joining founding Board Member Dan Goelzer and Board Member Steve Harris. Other than the day on which the Board’s five founding Board members commenced their new duties back in 2003, this marks the first, and likely only, time when new Board members comprise a majority of the Board. This presented a unique opportunity to all five of us, Board Members new and “seasoned”, to take a fresh look at what the PCAOB does and how we do it.

Strategic Plan

Our mission is to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports. In practical terms, I think of this as being the primary regulator over the auditors of public companies and ensuring that they do their job to provide assurance on the fair presentation of the financial statements investors rely on as part of their investment decisions.

Among other changes, we took the opportunity to re-think our approach to the Board’s five-year strategic plan, which is intended to guide the Board’s operations and to assist the Board in determining its budget needs and priorities. The result is the plan we are approving today, somewhat streamlined compared to prior versions and featuring three overarching goals relating to our knowledge, our relevance, and our people.

I have now completed my 10^th month on the Board. I frequently ask myself if we are spending our time on the right things and doing the right things. We possess unique data and analysis related to audits based on eight years of inspections and enforcement experience. I also ask myself “what does this all mean?” The Strategic Plan provides a framework to address these questions.

The 2011-2015 Strategic Plan also features for the first time an analysis of the Board’s views of its strengths, weaknesses, opportunities and threats, and established goals, objectives and strategies intended to help the Board exploit those strengths and opportunities and address its weaknesses and threats. The Strategic Plan, including this analysis, will be a dynamic document that the Board will continue to revise on an ongoing basis. While we made great progress this year in refining and articulating our goals, I believe we can do more to define our strategies and develop meaningful metrics for all of our activities that will allow Board Members to monitor our progress. Our ultimate goal is to achieve our mission in the most effective and efficient way possible.

Budget

Keeping in mind our goals and objectives set forth in the Strategic Plan, we are also approving today the PCAOB’s budget for 2012. Coming in at just over $227 Million, the 2012 budget represents an increase of approximately 11 percent over the budget for 2011.

The single largest factor driving this increase is the need for additional resources in the Division of Registration and Inspections, making up over 92% of the increase over the 2011 budget. The implementation of the Dodd-Frank Act’s amendments to the Sarbanes-Oxley Act expanded the Division’s oversight responsibilities to include audits of the financial statements and selected practices and procedures of broker-dealers. The 2012 budget includes funding for 30 additional inspections staff to continue efforts commenced in 2011 to build a broker-dealer inspection program. We are also funding smaller increases in the Division of Enforcement and Investigations and Office of the Chief Auditor, which complement the work of the Inspections Division in working toward our mission of improving audit quality. In contrast, our supporting Offices – which include, for example, the Offices of Administration, Research and Analysis, Outreach, Internal Oversight, International Affairs and several others – will be subject to a cumulative cut in the 2012 budget of over $1.5 Million.

I believe that the budget we are approving today appropriately increases the Board’s resources where they are needed most to achieve our mission of improving audit quality. Our main focus has been and should continue to be the effective inspection of audit firms. Nevertheless, we recognize the difficult financial times in which we find ourselves, and we take seriously our commitment in our Strategic Plan to the careful stewardship of resources. I believe the proposed budget achieves that balance.

In closing, I would like to join my fellow Board members in thanking the staff for their tireless efforts in connection with the Strategic Plan and Budget we are adopting today. In addition to our Budget Office, whose members drive the process and who spent many late evenings crunching numbers, we benefitted from the involvement of staff members from every Office and Division of the organization as we navigated the appropriate path forward. Change is not always easy and I especially appreciate the support from those staff that embrace the process and substantive changes we have initiated. I would also like to thank the staff of the Securities and Exchange Commission for their considered questions, comments and feedback.