I commend the PCAOB staff for the hard work and efforts in updating the array of planned actions in the proposed 2015-2019 Strategic Plan and the accompanying proposed budget. The actions detailed in the strategic plan, and the resources needed to execute them and carry out our on-going operations, comprise a proposed budget of $257.7 million for 2016.
The proposed 2016 Budget of $257.7 million represents a 2.7 percent increase ($6.8 million) over PCAOB's 2015 Budget, and a 5 percent increase over the amount we actually expect to spend in 2015 ($244.9 million).
The proposed increase over the 2015 Budget relates primarily to incremental increases in personnel costs, including those associated with new positions to further build out our inspections, risk and economic analyses, and administration functions. Other incremental increases include additional non-personnel costs, such as consulting and professional fees to augment these and other functions, offset by lower costs for travel and related expenses as well as a decrease in capital expenditures.
I support holding our budget to a low rate of growth as we continue to implement organizational realignments and improvements to our programs and operations. The proposed budget is sufficient to fulfill our mission of protecting the interests of investors and furthering the public interest in the preparation of informative, accurate, and independent audit reports, while making needed improvements in our administrative and program operations.
As I have noted in my comments on the past two years' budgets, much work remains to be done for PCAOB to mature as a nimble and agile organization under a relatively stable size and structure. Our continued work should help enhance the efficiency and effectiveness of our programs and operations.
Maturing our organization from an adolescent start-up into a more sophisticated regulator that applies effective management techniques will allow us to respond to three interrelated and fundamental needs that are addressed by various actions in the proposed 2015-2019 Strategic Plan: unfinished business from our startup phase; identifying and responding to new and emerging risks and challenges; and modernizing our operations and administration.
Since the PCAOB opened its doors in 2003, Board members and staff have been busy building out effective regulatory programs and responding to significant policy and audit practice issues that have adversely affected the capital markets.
Much work remains, however, on finalizing our review of interim auditing, quality control, ethics, and independence standards that the PCAOB adopted from the profession in 2003. In 2012, the Board added to its strategic plan the near-term goal of "[e]nhancing the framework for PCAOB's standard-setting process in order to improve the effectiveness of the process as well as the standard-setting project tracking information provided to investors and the public." During 2015, we have engaged a consultant to assist with this process, and those efforts will continue into 2016.
We also continue to develop plans for a permanent program of inspection and enforcement for auditors of brokers and dealers under authority provided to the Board in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
In addition, work remains on a number of the recommendations of the U.S. Department of the Treasury Advisory Committee on the Auditing Profession that were directed at the PCAOB, many of which reflected longstanding issues and ideas identified in earlier studies of the accounting and auditing profession.
Ongoing work is needed to address the role and importance of the audit in today's capital markets. The PCAOB's recent focus on economic analysis and economic research into the role and relevancy of the audit has the potential to more fully address these issues, in addition to helping finalize our reviews of the interim standards.
Finally, the PCAOB continues to establish effective means of interaction with relevant stakeholders, such as audit committees, investors, issuers, and broker-dealers to achieve common goals and to articulate the PCAOB's goals, priorities, and results and their impact on the capital markets.
New and Emerging Risks and Opportunities
Meanwhile, our existing oversight and outreach programs continue to identify new and emerging issues that may require a regulatory response. For example, our inspections and enforcement activities identify common audit practice issues arising from frequent findings of noncompliance with certain auditing standards.
As reflected in recent Staff Audit Practice Alerts and PCAOB general reports on inspections findings, we have begun to identify and communicate frequent findings to investors, auditors, audit committees and other stakeholders. We have heard from many stakeholders, however, that there is a strong interest in receiving this reporting on a more timely basis, as well as receiving additional information about how these findings affect the capital markets and what actions are being taken to respond to them.
In addition, our Standing Advisory Group and Investor Advisory Group regularly bring to the Board's attention a myriad of new and emerging risks and challenges, such as various market and environmental pressures that may impact audit quality. These include issues related to the globalization of the market for audit services, advances in technology that may be outpacing audit practices, trends in the multi-disciplinary business models of audit firms, demographic trends affecting the audit workforce, and behavioral and compensation incentives that may undermine the objectivity, professional skepticism, and independence of audit firms and auditors.
Finally, we face a growing number of questions arising from the impact of audit regulation and changes in audit practice on issuers, brokers and dealers, as well as the effectiveness of audit reports, in combination with changes in financial reporting, to communicate effectively to investors the information they need to protect their interests.
Modernizing Our Operations and Administration
As I have pointed out in the past, the PCAOB has the opportunity to address these longstanding and new or emerging issues by adopting the most effective management tools and techniques.
First, I continue to believe that we can enhance our strategic planning and budgeting process to more effectively involve the Board in identifying, prioritizing, and developing responses to major policy and resource issues before the staff develops action plans and assesses resource needs in a preliminary budget. To begin with, the Board could take inventory of these longstanding and new and emerging issues and provide transparency to the public on our progress on each issue.
We can also enhance our ability to respond effectively to the major policy and resource issues by developing strategic and annual performance measures that support the performance budget required by the Securities and Exchange Commission (SEC). For years, we have stated our intention to develop these. We have made some limited progress in this regard, but additional work is needed.
Our Chief Administrative Officer is studying potential recommendations to enhance our budgeting process to help us more effectively prioritize, manage, and communicate our resource needs and practices.
Second, we should place a high level of focus and priority on the initiatives recently outlined by the staff to modernize our administrative practices. These include all aspects of our administrative activities in human resources, finance, budget, and facilities management. When integrated with our other operations, these should afford a high return on investment in terms of both efficiency and programmatic results. I support the additional staff and budget resources requested by our Office of Administration for these initiatives, and I commend the staff for their efforts and progress thus far.
Finally, we have many opportunities to further integrate our programmatic activities and resources to provide more timely analysis and insights into policy and operational risks and results. For example, the proposed strategic plan and proposed budget emphasize initiatives related to developing a PCAOB-wide data management strategy, improving the efficiency and effectiveness of PCAOB's standard-setting function that considers input from our other oversight programs, and better integrating economic and statistical analyses into PCAOB's standard-setting and other programmatic functions.
History has shown that regulators that rest on past policy and operating decisions by neglecting to question or test their existing structures, objectives, processes, and controls are at higher risk of overlooking and/or ineffectively reacting to market risks.
We have many opportunities to enhance the ability of the Board to receive more timely and integrated analyses and insights for effective policymaking to meet our ultimate objectives of protecting the interests of investors and furthering the public interest in the preparation of informative, accurate, and independent audit reports.
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I believe that the budget we are voting on today appropriately reflects the Board's strategic priorities and resource needs for 2016 to fulfill our obligation to improve audit quality to protect the interest of investors and further the public interest, while continuing the organization's evolution as a regulator.
In closing, I would like to join my fellow Board members in thanking the staff for their efforts in connection with the strategic plan and budget we are adopting today. I would also like to thank SEC staff for their questions, comments, and feedback during the process of developing the strategic plan and budget.
 See Jeanette M. Franzel, Board Member, Statement on Proposed 2015 Budget and Strategic Plan, Nov. 25, 2014; Jeanette M. Franzel, Board Member, Statement on Proposed 2014 Budget and Strategic Plan, Nov. 25, 2013.
 PCAOB 2012-2016 Strategic Plan: Improving the Relevance and Quality of the Audit for the Protection and Benefit of Investors, pg. 5 (Nov. 30, 2012).