Statement on Proposed 2016 Budget and 2015-2019 Strategic Plan

Good Afternoon,

The Board today is approving the PCAOB's budget for 2016.

Last year at this time, I explained that it was the Board's goal to base its budget on what it can reasonably and realistically accomplish, not merely on our aspirations. Thus, it was my hope that our actual spending in 2015 would match the 2015 budget as closely as possible. Current estimates indicate that we will end the year with a slight "underspend" of less than 3%, much less than the annual underspend of 6 to 10% we have seen for the last decade. I consider that an improvement, given that the amount of the annual Accounting Support Fee charged to issuers, brokers and dealers is derived directly from our budget projections. Hopefully, we will do even better in 2016.

Like the 2015 budget, the budget for 2016 is relatively conservative and reflects very little spending growth. At $257.7 million, it is 2.7 percent more than the 2015 Budget. The vast majority of the increase (over 75%) is attributable to personnel costs, including primarily increased employee-benefit costs and performance-based compensation increases for current employees. The 2016 budget also contemplates twenty new positions compared to the 2015 budget, in addition to filling 16 positions that are currently open and not expected to be filled by the end of 2015. The newly created positions are primarily in the areas of Inspections, Information Technology, and Research and Analysis. Additional personnel-related costs include recruiting and relocation, as well as training.

The balance of the PCAOB's 2016 Budget relates to non-personnel costs including administrative expenses, consulting and professional fees, facilities, information technology, and travel. Collectively, the funds budgeted in these areas for 2016 decrease when compared to the 2015 budget.

In short, I am satisfied that our 2016 budget appropriately funds the anticipated and necessary operational expenses of the PCAOB and does not set unreasonable goals for headcount or consulting. Our staff has diligently provided estimates that are well supported and realistically reflect the financial resources our offices and divisions will need to satisfy their mandates and to allow the Board to achieve its mission protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports.

Our Strategic Plan continues to focus on similar goals and objectives as in years past, with renewed emphasis on improvements in standard setting, data aggregation and analysis, outreach and transparency. We also plan to continue our work on the development of appropriate audit quality indicators, enhance our ongoing outreach efforts to audit committees and others, and further develop the economic analysis function in support of standard setting.

In addition to the goals, objectives and strategies set forth in the Strategic Plan, I believe the Board should commit to an evaluation of how it can most effectively and efficiently draw on the deep expertise of our Standing Advisory Group. This would effectively complement our ongoing work to improve the standard setting process and may provide an opportunity to address concerns that SAG members' do not have sufficient time during meetings to provide substantive input. SAG members dedicate significant effort to preparing for and attending our meetings, and we owe it to them to maximize the efficiency and effectiveness of this group.

As always, we need to continue to deploy our resources wisely with a strong focus on our mission of improving audit quality. We focused this past year on carefully defining the mission and activities of the Center for Economic Analysis to ensure a close link to our overall mission. In the coming year, we will continue our close oversight over the Center, including by asking the staff to demonstrate whether and how the Center's various activities, including research by academic fellows, conferences and other research related efforts will inform the Board in connection with its regulatory activities.

Finally, the 2016 budget funds additional staff and consulting projects in our Office of Administration, which continues the much needed work to update processes and systems to keep up with the PCAOB's growth, changes in applicable laws and regulations and advances in technology.

Unfortunately, while I support the 2016 budget and believe the strategic plan appropriately guides our activities for the next fiscal year, I believe there is significant room for improvement in the process that brought us to this point. I am troubled by the lack of timely, long-range strategic planning and the abbreviated opportunity afforded to Board members to review the budget and the hundreds of pages of underlying documentation.

I have discussed with the staff in our Office of Administration ideas to be considered in a comprehensive review of the process that would better prioritize the Board's discussion of policy and strategic matters before the development of the budget itself. This would allow the Board to develop a strategic direction, establish priorities and communicate its vision for the future to the staff before the Offices and Divisions prepare their budget requests. I look forward to the staff's suggestions for improvement and a better process in 2016.

Let me wrap up by thanking the staff for all of their hard work. Though I believe there is room for improvement in our budget process, I know that many of you worked long hours to prepare the Board for today's meeting. In addition to members of our Budget Office, including Jim Hearn and Bobbie Rose, and members of the Office of Administration, including Suzanne Kinzer, Jeannie Boehne, Bill Wiggins, and Yoss Missaghian, we benefitted from the views and experience of staff members from every PCAOB Office and Division. I would also like to thank the staff of the Securities and Exchange Commission for their questions, comments and feedback during this process.

Finally, I would like to wish everyone a Happy Thanksgiving. I hope that you all get some well-deserved time with family and friends over the next few days.