The Public Company Accounting Oversight Board (PCAOB) released a proposed five-year strategic plan on Tuesday, centered around four goals: modernizing standards, enhancing inspections, strengthening enforcement and improving organizational effectiveness. The PCAOB is inviting the public to comment on how it will pursue its mission of protecting investors from 2022 to 2026.
According to the PCAOB’s press release, comments on the draft plan must be received by Sept.15, 2022, and may be submitted by email to comments@pcaobus.org; or by postal mail to the Office of the Secretary, PCAOB, 1666 K Street, NW, Washington, DC 20006-2803.
Accounting Today reported that the PCAOB is in a position to issue the proposed plan, now that four out of five new board members have settled in. The goal of the plan is to stabilize the PCAOB after years of upheaval. Securities and Exchange Commission (SEC) and its chairman, Gary Gensler have asked the new chair, Erica Y, Williams, to update the sometimes archaic standards at the board at a at a more rapid pace.
In a statement, Williams said, “As with everything we do at the PCAOB, the people we serve were top of mind throughout that process—from workers saving for retirement to parents saving to put their kids through college, and anyone who depends on the soundness of our capital markets to invest for their future. Our first step in crafting the strategic plan was to listen to our stakeholders. We considered the perspectives of investors and other professionals—including financial statement preparers, audit committee members, academics, and auditors – about PCAOB programs and the changing landscape in the capital markets. We established two new advisory groups: the Investor Advisory Group and the Standards and Emerging Issues Advisory Group. And we gathered their advice and perspectives on our strategy at their very first meetings. We sought the views of our experienced and talented staff on how best to execute the PCAOB’s mission. We gathered input from the Securities and Exchange Commission. And with today’s vote, we are soliciting public comment.”
Williams also mentioned the PCAOB’s recent enforcement efforts. She said, “In terms of inspections, our inspections team is constantly adjusting to be responsive to new and emerging risks across the globe – whether it’s SPACs and de-SPAC transactions, cryptocurrencies, or how firms are addressing the effects of supply chain disruptions and rising costs on company operations. The Office of International Affairs is working day and night to reach an agreement to inspect and investigate the audits of Chinese firms completely—with no loopholes and no exceptions. And should we reach that agreement, our inspections and enforcement teams are ready to travel to China and ensure that what we have on paper works in practice.”
Last week, five major Chinese companies announced that they planned to delist from U.S. exchanges rather than be subject to PCAOB inspections.
Duane M. DesParte, the most senior board member, said “For 20 years, the PCAOB has played a pivotal role in driving improvements in audit quality through its oversight activities. The Board’s draft Strategic Plan before us today builds upon this legacy and provides us a roadmap for further fulfilling our mission of investor protection over the next five years."
Board member Christina Ho said, “This roll-out for public comment of the draft Strategic Plan is a seminal moment for the PCAOB and this Board to support our mission of protecting investors. Once finalized, the Strategic Plan will help: (1) prioritize efforts; (2) effectively allocate resources; (3) align employees to the PCAOB Strategic Plan’s goals; and (4) ensure that the fulfillment of those goals is backed by data and sound reasoning. I am particularly pleased that the draft Strategic Plan emphasizes data and technology, particularly the statement that the PCAOB will leverage both internal teams and external experts to inform our standard-setting agenda.”
Board member Karen M. Stein said, “Passed in 2002, the Sarbanes-Oxley Act was a return to foundational principles. It created a new audit firm regulator, the PCAOB, that would (1) prioritize the needs of investors; and (2) ensure the independence and competence of auditors. As our Chair, Erica Williams, has stated: "the heart of our mission is the people who invest in public companies.” And I am pleased that the proposed Strategic Plan reflects this focus."
And board member Anthony C. Thompson said, “As we embark on our third decade, our strategic plan serves as a roadmap to achieving our vital mission of investor protection, and by incorporating feedback directly from our stakeholders we can ensure that our strategic plan is not only fit for purpose, but also reflects a multitude of views, including investors, audit committees, preparers, and the firms we regulate."