Statement on the PCAOB 2018 Budget and Related Strategic Plan

The 2018 Budget and related strategic plan are the result of considerable thought by Board members and senior program staff. They reflect careful planning, responsible stewardship, and a deep commitment to the PCAOB's public interest mission.

I want to express my appreciation for the work of our Chief Administrative Officer Suzanne Kinzer, Senior Deputy CAO Bill Wiggins, Budget Officer Jim Hearn, and Bobbie Rose and Alfredo Azocar. I also thank the SEC staff for their support and counsel throughout the year, in particular Chief Accountant Wes Bricker, Deputy Chief Accountant Marc Panucci, Acting CFO Caryn Kauffman and CIO Pam Dyson.

The PCAOB is a cost-effective, vital resource protecting investors and fostering economic resilience by promoting reliable, informative and independent audit reports through effective inspection, enforcement, and standard setting programs.

Accurate and transparent financial audits are a cornerstone to promoting investor trust and facilitating investment that grows capital markets and a healthy economy.

The intent of this budget, and the updated strategic plan on which it is based, is to enable the PCAOB to continue to protect investors and to enhance the trust that facilitates capital formation.

Founded on these principles, the 2017-2021 strategic plan reflects continuation of important work and initiatives begun under previous plans. This updated plan and the 2018 budget will facilitate our efforts to continue to pursue key ongoing strategies designed to achieve our mission.

The 2018 Budget will allow us to conduct rigorous inspections in both the United States and abroad, to meet mandatory annual and triennial cycles applicable to audits of issuers and broker-dealers. Although we have found ways to reduce our travel budget, we will inspect in more jurisdictions than ever before.

We also will continue to address significant audit and other compliance failures through enforcement. The PCAOB announced a record number of 54 disciplinary sanctions in 2016, 24 of which involved firms and audit personnel outside the U.S. As we near the close of the year it looks like we will reach a comparable level in 2017. The 2018 Budget assumes continuation of this vigilance.

Our standards group will progress important standard setting initiatives relating to use of other auditors in multi-national audits, use of specialists, and auditing fair value measurements and other estimates.

We also will monitor and assist firms in implementing our historic new audit reporting requirements. As part of this work, our economists have already begun to plan for a post-implementation review to assess the economic impact of the standard.

Our economists also will continue to work with our cross-divisional teams on other important research projects, including projects to take a fresh look at standards related to developments in audit technology tools, the auditor's responsibility related to non-compliance with laws by audit clients, and the auditor's responsibility for other information disclosed by audit clients outside the financial statements.

We will also continue other important work related to risk assessment; collaboration with our counterparts around the world; and engagement with investors, audit committees, the small business community and other stakeholders.

This is all important work, thoughtfully planned to achieve our mission.

The 2018 Budget reflects significant efforts over the past year to identify opportunities for efficiency and develop and implement initiatives to test and achieve those efficiencies.

I want to congratulate our administrative team and our major program leaders on this work, as well as the many staff who responded to our organization-wide request for suggestions and participated in analyzing and implementing cost saving strategies.

The initiatives you have developed have achieved savings without jeopardizing the PCAOB's ability effectively and efficiently to pursue its investor protection mission.

In implementing them, you also have been mindful of maintaining employee engagement.

As a result, the 2018 Budget is overall approximately 5 percent less than the 2017 Budget, with the exception of some additional funding for information technology, in light of the significant cybersecurity threats and continuity planning needs in the world today.

The 2018 Budget also reflects a 12 percent decrease in the PCAOB accounting support fee. This is in part due to savings achieved this year, which offset the 2018 accounting support fee.

In conclusion, I am immensely proud of the PCAOB staff for their creativity and dedication 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.

I am comfortable that the Board's 2018 Budget is appropriate and should be submitted to the SEC for its approval.