Statement on Proposed 2016 Budget and 2015-2019 Strategic Plan

The 2016 budget and related strategic plan are the result of considerable effort and thought by board members and senior programmatic staff.

I want to express my appreciation for the efforts of our Chief Administrative Officer Suzanne Kinzer, Deputy CAO Bill Wiggins, our Deputy CFO Jeannie Boehne, Budget Officer Jim Hearn, as well as Bobbie Rose and Yoss Missaghian. Equally, I would like to thank the SEC staff for their support and counsel throughout the year, in particular Chief Accountant Jim Schnurr, Deputy Chief Accountant Brian Croteau, and Chief Financial Officer Ken Johnson.

The 2015-2019 strategic plan reflects continuation of important work and initiatives begun under previous plans. This updated plan and the 2016 budget together will allow us to redouble our efforts on a number of key strategies to achieve our mission.

The 2016 Budget will allow us to conduct 150 issuer inspections in the United States and 62 inspections abroad to meet mandatory annual and triennial cycles, and examine portions of 835 audit engagements.

It will also allow us to continue to gather information in our temporary broker-dealer audit inspection program, by examining 75 firms that audit brokers or dealers and a total of 115 broker-dealer audit engagements. This information will be important to our development of a permanent inspection program, including our evaluation of appropriate exemptions.

In the area of economics, our Center for Economic Analysis has promoted more fluid coordination among the PCAOB's programs in order to better leverage data and insights obtained through our various programs. This is particularly important to our consideration of potential new auditing standards. In addition, the Center has begun our first post-implementation review of a previously adopted auditing standard as well as a project to help the Board consider ways to incorporate an element of random selection in our inspections.

The 2016 Budget also includes funds to complete our review of our standard-setting process to optimize performance. I continue to work closely with the Commission's Chief Accountant Jim Schnurr in this effort. I am grateful for his support, and I know we are both committed to achieving a result that will benefit the PCAOB, the Commission and the public interest.

We have already begun to see the fruits of this work, in the form of deeper analysis and more efficient internal work both at the staff and Board level.

As a result, I believe we will be in a position very soon to finalize our rule to provide greater transparency in execution of the audit, through identification of the engagement partner and other accounting firms that participate in the audit.

We should also, in 2016, see a new proposal to expand the standard form auditor's report, as well as new proposals on audit procedures related to using the work of other auditors, using the work of specialists, and auditing accounting estimates, including fair value measurements.

We will also continue our outreach to audit committees in 2016, including by looking for ways to help them be effective in overseeing the audit, for example, through wider use and continued evaluation of appropriate audit quality indicators.

I am immensely proud of the PCAOB staff for their creativity in developing new techniques to bring to bear in their work, as well as their commitment to identifying the most effective ways to protect investors.

The 2016 Budget is only 2.7 percent higher than our 2015 Budget, and it is lower than our 2014 Budget.

Let me say a word about the mechanics of our budgets. Since inception, the PCAOB has underspent its budgets, having faced severe hiring challenges in several key employment markets.

We built our 2015 Budget on fairly conservative hiring estimates – that's why both the 2015 Budget and the 2016 Budget are less than the 2014 Budget. As a result we now expect actual spending in 2015 to fall short of the 2015 Budget by only 2.4 percent – the PCAOB's smallest underspend ever.

Given all the work and support that has gone into the budget, I am comfortable that it is appropriate and should be submitted to the SEC for its approval.