The Public Company Accounting Oversight Board (“PCAOB”) is a key component of the investor protection ecosystem. It oversees “the audit of companies that are subject to the securities laws…in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports.”[1] This responsibility has been given to the PCAOB through an act of Congress.[2] I am happy to support the budget today so that Chair Williams, the board members, and, most critically, the PCAOB’s staff may meaningfully fulfill that responsibility.

The statutory requirements the PCAOB must implement appear throughout the Sarbanes Oxley Act.[3] Enacted in the wake of the Enron and Worldcom scandals, these requirements are necessary to prevent similar scandals and a concomitant decline in investor confidence of financial reporting. And the statutory requirements are numerous. For example, the PCAOB is required, by statute, to register all accounting firms that prepare audit reports for public companies; establish auditing quality controls, ethics, independence, and other standards; conduct inspections; conduct disciplinary proceedings; and carry out other duties or functions as necessary or appropriate to promote high professional standards among, and improve the quality of audit services offered by, registered audit firms.[4] And I am only scratching the surface. As we consider the PCAOB’s budget, it is important to give due weight to the full breadth of the board’s and its staff’s obligations, and also recognize the importance of their work: to ensure that financial reporting in the roughly 50 trillion dollar U.S. capital markets--the reporting that forms the basis of investment decision-making and investor confidence--is done accurately and subject to an independent audit. And while the PCAOB is making meaningful progress, there is still room for improvement in audit quality.

Chair Williams and the PCAOB staff have observed that an expected 40% of the audits reviewed by the PCAOB in 2022 contained deficiencies relating to whether an audit firm obtained sufficient evidence to support audit opinions.[5] And those deficiencies were not ancillary or secondary to the veracity of the audit. Rather, those deficiencies called into question whether an appropriate amount of evidence supported an auditor’s opinion on the financial statements or internal controls over financial reporting.[6] Improving audit quality requires appropriate staffing and money.

The PCAOB is also increasing its presence internationally. The Holding Foreign Companies Accountable Act created new mandates and in response the PCAOB has conducted inspections and investigations of registered firms in China and Hong Kong – for the first time in history.[7] This also requires appropriate staffing and money.

The PCAOB is in its 21^st year of existence. It was not that long ago when there was no PCAOB and the prevailing audit standards were generated by the audit industry itself.[8] It is important to remember that when it first came into existence, the PCAOB adopted those existing industry standards on an interim basis. However, the goal was always that the PCAOB would generate its own, independently developed, standards. And that requires appropriate staffing and money.

So as I look at the year over year increases in the PCAOB budget, I keep in mind that the board and its staff have their work cut out for them. The primary driver of this year’s budget increase is the workforce. The people. I am absolutely supportive of investment in the hardworking, dedicated, and technically skilled staff at the PCAOB. I want to help ensure that public company financial statements are subject to audits that produce a high level of reliability and accuracy in reporting and can form the basis of investments that represent the savings of everyday people. And it’s the staff of the PCAOB who do that.

Accordingly, I support today’s budget. It represents 21 years of learning and adapting, and moving forward, not backward. Forward with inspections, enforcement, and implementing fundamentally important standards. Forward with its statutory obligation of ensuring informative, accurate, and independently audited financial statements that represent trillions of dollars of value and form the basis for investor confidence in our capital markets. This budget, and the results that have been produced in recent years, shows me the PCAOB is maximizing the dollars it collects from accounting support fees in an efficient and effective manner.