Symbol

Global Style Sheet

Video

HeroBlock

Enhancing public trust in the capital markets by promoting high-quality financial reporting.

<p>The Center for Audit Quality</p>

NewsTicker

Text

Discover the latest insights, resources, and standards in auditing and accounting at the Center for Audit Quality (CAQ) website. Access valuable guidance, research, and tools to enhance your expertise and stay informed in the ever-evolving auditing landscape. 

Dennis J. McGowan, CPA is the Vice President, Professional Practice and Anti-Fraud Initiatives at the Center for Audit Quality. In this role he leads regulatory and policy strategies that foster high-quality performance by public company auditors.

His duties include leading a team of audit executives to advance technical and policy-oriented projects to identify, develop, and seek consensus on issues affecting the public company auditing profession. McGowan is also responsible for overseeing the CAQ’s anti-fraud initiatives. This includes engaging with senior leaders across the financial reporting ecosystem, drafting comment letter responses to regulators, developing thought leadership publications, and responding to technical inquiries.

Dennis serves as a Board Member of Annapolis Pride, an organization dedicated to celebrating the LGBTQ+ community in Annapolis. Before joining the CAQ, he spent a decade at PwC, where he specialized in auditing clients in the financial services industry.

Dennis is a Certified Public Accountant licensed in Pennsylvania, and he holds a BS in Business Administration from La Salle University.

Dennis McGowan, CPA

Investor trust in U.S. capital markets has been built over decades through strong accountability, transparent financial reporting, and effective internal controls. That trust is supported by a capital markets ecosystem in which each stakeholder plays a vital role.

The SEC's proposal,...

Investor trust in U.S. capital markets has been built over decades through strong accountability, transparent financial reporting, and effective internal controls. That trust is supported by a capital markets ecosystem in which each stakeholder plays a vital role.

The SEC's proposal, <a href="https://www.sec.gov/rules-regulations/2026/05/s7-2026-18"><em>Enhancement of Emerging Growth Accommodation and Simplification of Filer Status for Reporting Companies</em></a><em>,</em> would expand the number of companies eligible for certain scaled reporting and compliance accommodations.

If adopted, the proposal would consolidate filer classifications into two primary categories: large accelerated filers and non-accelerated filers. The SEC’s Proposal estimates that approximately 60% of companies currently subject to internal control over financial reporting (ICFR) auditor attestation requirements under Section 404(b) would become newly exempt if the Proposal was adopted. Robust ICFR supports high quality, reliable financial reporting. The SEC also proposes a five-year period before newly public companies could be designated as large accelerated filers, regardless of their size or growth during that time.

At the Center for Audit Quality (CAQ), we support the SEC’s goal of simplifying filer status and reducing unnecessary regulatory costs. However, we believe the proposal's exemptions from ICFR attestation requirements may be too broad and the five-year accommodation for newly public companies regardless of size is not appropriately tailored.

The framework should evolve alongside the changing business landscape, but any changes should carefully balance the goal of reducing compliance burdens with the investor protections and market safeguards that underpin confidence in U.S. capital markets.


<p class="pf0"><span class="cf0">[custom_quote text="The SEC also proposes a five-year period before newly public companies could be designated as large accelerated filers, regardless of their size or growth during that time."]</span></p>

<h3><strong>Why ICFR Matters Within the Financial Reporting Ecosystem</strong></h3>
The Sarbanes-Oxley Act (SOX) was signed into law over 20 years ago in response to the financial reporting scandals of the early 2000s. The legislation strengthened corporate accountability and aimed to restore investor confidence in the integrity of U.S. capital markets.

SOX created an interconnected system of checks and balances in which the responsibilities of management, audit committees, auditors, regulators, and boards reinforce one another. That ecosystem includes:
<ul>
 	<li>Management certification of financial reports and internal controls;</li>
 	<li>Audit committee oversight of external auditors;</li>
 	<li>Independent auditor attestation of ICFR;</li>
 	<li>Enhanced auditor independence requirements; and</li>
 	<li>Independent oversight of public company auditing.</li>
</ul>
ICFR requires companies to establish, maintain, and evaluate effective internal controls. Auditor attestation over ICFR provides independent assurance regarding the effectiveness of a company’s internal controls and contributes additional rigor and discipline to the financial reporting process.

ICFR plays an important role in the broader system to promote confidence and informed decision-making in the capital markets. <a href="https://blog.auditanalytics.com/sox-404-disclosures-a-seventeen-year-review/">Evidence</a> suggests that ICFR oversight contributes to more effective financial reporting controls and reinforces accountability. Expanding exemptions from ICFR auditor attestation warrants careful consideration of the potential effects on financial reporting quality, investor confidence, and transparency in the capital markets.

<span class="cf0">[custom_quote text="ICFR plays an important role in the broader system to promote confidence and informed decision-making in the capital markets."]</span>
<h3><strong>Why Emerging Risks Increase the Value of Independent Assurance</strong></h3>
For companies of all sizes, ICFR remains critical in today's reporting landscape as advanced technologies increase in scale and complexity. Public company <a href="https://www.thecaq.org/audit-partner-pulse-survey">audit partners</a> report that technology disruptions and AI-competitive pressure are the top economic risks facing public companies in the next 12 months, and that AI governance presents the biggest challenge to audit committees.

Technology-related controls are already being identified as common areas of material weakness, and internal controls are among the primary mechanisms companies use to establish the reliability of their reporting processes and systems. As companies increasingly deploy AI and other advanced technologies in financial reporting, confidence in the controls governing those systems becomes even more important.

Public company status provides meaningful benefits, including access to capital, liquidity, and participation in deep and efficient markets, but comes with responsibilities to investors and the broader marketplace. Regulatory requirements should be appropriately tailored to company size and complexity while carefully balancing capital formation objectives, investor protection, and confidence in the capital markets.

<span class="cf0">[custom_quote text="For companies of all sizes, ICFR remains critical in today's reporting landscape as advanced technologies increase in scale and complexity."]</span>
<h3><strong>Why a Tailored Approach Can Maintain Confidence</strong></h3>
The CAQ believes there is an opportunity to reduce compliance costs and complexity while maintaining audit quality and investor protections. As outlined in the <a href="https://www.thecaq.org/comment-letter-to-the-sec-on-simplification-of-filer-status">CAQ's comment letter</a>, targeted refinement could advance the SEC's objectives while preserving important safeguards.

Our recommendations for the SEC include:
<ul>
 	<li>Reinforcing the application of materiality principles;</li>
 	<li>Clarifying implementation guidance around ICFR;</li>
 	<li>Promoting more risk-based approaches to compliance; and</li>
 	<li>Simplifying areas where requirements have become unnecessarily complex over time.</li>
</ul>
The SEC could also consider whether certain requirements can be better tailored based on a company's size, market significance, and complexity. These reforms could help address legitimate concerns regarding compliance burdens while preserving important elements of the oversight structure that supports investor decision-making.

Ultimately, investor protection, public company accountability, and capital formation are not competing objectives. They are interdependent drivers of healthy and efficient capital markets. As policymakers consider the future of the public company accountability framework and filer status requirements, we support the SEC’s goal of reducing unnecessary regulatory costs and encourage the Commission to carefully consider the potential effects of the proposal on investor protection, financial reporting quality, and confidence in the capital markets.

<a href="https://www.thecaq.org/register"><em>Subscribe</em></a><em> to the CAQ and follow us on </em><a href="https://www.linkedin.com/company/center-for-audit-quality"><em>LinkedIn</em></a><em> for the latest public company audit profession news.</em>

ICFR's Role in the Public Company Accountability Framework

Preparers/Issuers

Audit Quality

Blog Post

hs_troy-merkel

HS_Troy Merkel

Troy Merkel

Assurance Digital Leader, RSM LLP

The public company audit profession has never stood still. From the early 20th century securities laws that first required independent verification of financial statements, to the significant governance reforms in the early 21st century, to the integration of advanced data...

The public company audit profession has never stood still. From the early 20<sup>th</sup> century securities laws that first required independent verification of financial statements, to the significant governance reforms in the early 21<sup>st</sup> century, to the integration of advanced data analytics and artificial intelligence into audit processes today, the profession has continuously evolved with the business environment, technologies and regulatory frameworks of the time, while holding firm to the principles that make audited disclosures worth trusting: consistency, comparability and reliability.  In 2026, that evolution is accelerating as firms continue applying artificial intelligence (AI), automation, and connected digital workflows to enhance audit quality, strengthen execution, and provide deeper insights.

At RSM, three innovations that were added to our digital audit ecosystem within the past year—Ask Luca, Microsoft M365 Copilot and RSM Luca Resourcing—are examples of how the profession is continually investing in technology to enhance our processes while keeping professional judgment, trust and confidence at the center of the audit.


<p class="pf0"><span class="cf0">[custom_quote text="In 2026, that evolution is accelerating as firms continue applying artificial intelligence (AI), automation, and connected digital workflows to enhance audit quality, strengthen execution, and provide deeper insights." attribution]</span></p>

<h3><strong>Ask Luca: trusted guidance where auditors work</strong></h3>
Generative AI is a powerful tool that is reshaping how public company auditors approach and perform the audit. The profession is identifying where it can be deployed throughout the audit and other assurance-related engagements to increase efficiency and enhance audit quality.

<a href="https://rsmus.com/newsroom/2026/rsm-launches-ask-luca.html">Ask Luca</a>, RSM’s generative AI copilot for assurance, gives our professionals faster access to firm-approved guidance sourced from RSM assurance manuals, practice aids and technical accounting guides. Ask Luca helps our auditors reduce research time, apply guidance more consistently, and focus more attention on the analysis, skepticism and judgment that define audit quality.

For other firms in our profession that have deployed comparable capabilities, grounding these tools in firm-approved guidance and experienced human review is vital.

<span class="cf0">[custom_quote text="The profession is identifying where it can be deployed throughout the audit and other assurance-related engagements to increase efficiency and enhance audit quality." attribution]</span>
<h3><strong>AI expanding capacity for higher-value work</strong></h3>
The strategic use of AI enables audit professionals to focus less on manual tasks and more deeply on the core value of the audit: providing reliable, decision-critical information to investors and other market participants.

At RSM, <u>Microsoft M365 Copilot</u> is helping our professionals work differently by supporting everyday tasks such as summarizing information, drafting communications, preparing meeting notes, and analyzing documents.

Used appropriately and with human oversight, tools like this free capacity for higher-value activities, helping our teams spend less time on routine work and more time understanding client risks, asking better questions, and delivering insights that support sound decision-making.

<span class="cf0">[custom_quote text="The strategic use of AI enables audit professionals to focus less on manual tasks..." attribution]</span>
<h3><strong>RSM Luca Resourcing: connecting people, projects and execution</strong></h3>
Another benefit of investing in and deploying AI technology is that we are able to streamline workforce planning while empowering leaders with better insights to make faster, more informed staffing decisions.

For my colleagues and I at RSM, Luca Resourcing strengthens how we plan and deploy our talent by replacing manual processes with a more connected collaboration tool. The tool supports initial staffing requests, budget planning, and engagement leader review, helping teams improve their visibility into engagement planning and align the right resources to the right work at the right time.

This approach enables audit teams to focus more time on delivering high-quality client service and executing audits with consistency and professional rigor.

<span class="cf0">[custom_quote text="The tool supports initial staffing requests, budget planning, and engagement leader review, helping teams improve their visibility into engagement planning and align the right resources to the right work at the right time." attribution]</span>
<h3><strong>Building confidence in a changing market</strong></h3>
Together, these innovations demonstrate how technology can enhance—not replace—the role of the auditor. Ask Luca supports consistent access to trusted guidance. Microsoft M365 Copilot helps professionals work with greater efficiency and focus. RSM Luca Resourcing improves the way teams plan, staff and execute engagements. Each advancement supports a common goal: enabling our people to deliver high-quality audits that help build trust and confidence in our markets.

As the marketplace continues to evolve, the public company audit profession must continue evolving and looking forward to progress along with it. That means investing in modern tools and developing new skills while applying the same independence, skepticism, and professional judgment that have long underpinned audit quality.

Shaping the future of assurance: Advancing AI in the audit

Emerging Reporting Areas

Artificial Intelligence

The Public Company Accounting Oversight Board (PCAOB) inspection program plays a key role in strengthening audit quality and promoting confidence in U.S. capital markets. This year's PCAOB inspection reports showed continued decreases in deficiency rates, indicating that firms are making...

The Public Company Accounting Oversight Board (PCAOB) inspection program plays a key role in strengthening audit quality and promoting confidence in U.S. capital markets. This year's <a href="https://pcaobus.org/oversight/inspections/firm-inspection-reports">PCAOB inspection reports</a> showed continued decreases in deficiency rates, indicating that firms are making meaningful progress in addressing issues identified through prior inspections.

As stakeholders review the latest findings in more detail, it is important to understand what these reports are designed to measure. While inspection findings provide meaningful information about how audit firms comply with professional standards and regulatory requirements, they are not intended to serve as a comprehensive assessment of a firm's overall performance. Viewed in the proper context, inspection reports remain an important tool for understanding and enhancing audit quality.


<p class="pf0"><span class="cf0">[custom_quote text="Viewed in the proper context, inspection reports remain an important tool for understanding and enhancing audit quality."]</span></p>

<h3><strong>An Important Accountability Tool</strong></h3>
PCAOB inspection reports serve the public interest by identifying audit deficiencies and promoting continuous improvement. Through inspections, the PCAOB evaluates selected audits performed by firms and assesses compliance with auditing standards, rules, and regulations. The results provide valuable learning opportunities, promote accountability, and help advance audit performance over time.

This year's reports demonstrate the profession's commitment to continuous improvement, with deficiencies among the six Global Network Firms (GNFs) declining 13% from the previous year.

Beyond individual findings, inspection results often highlight broader themes and opportunities, contributing to stronger audits, more reliable financial reporting, and greater confidence in U.S. capital markets.

<span class="cf0">[custom_quote text="Through inspections, the PCAOB evaluates selected audits performed by firms and assesses compliance with auditing standards, rules, and regulations."]</span>
<h3><strong>Reports Should Be Viewed in Context</strong></h3>
While inspection reports provide valuable information, the PCAOB has emphasized that findings should be interpreted in the proper context.

Inspection reports reflect the results of the PCAOB’s review of a selection of audits and are not intended to provide a comprehensive assessment of a firm's overall performance or serve as a ranking system among firms. Because inspections focus on selected engagements and risk areas, results may not be representative of a firm’s audits overall and may not be directly comparable across firms or from year to year.

It is also important to recognize that a PCAOB deficiency finding does not necessarily mean a company's financial statements were misstated, that material weaknesses in their internal controls over financial reporting exist, or that investors received inaccurate information. Deficiencies generally reflect situations in which the auditor did not obtain sufficient audit evidence to support its opinion at the time of the audit and rarely lead to restatements. In 2025, only one of the 312 audits reviewed by the PCAOB resulted in a restatement, and the number has been in the single digits in recent years as well.

For these reasons, inspection reports should be considered alongside other relevant information when evaluating audit performance and audit quality, rather than viewed as a standalone measure. This broader perspective aligns with how institutional investors currently evaluate audit performance. According to the <a href="https://thecaq.wpenginepowered.com/wp-content/uploads/2024/08/2024-July-PCAOB-Firm-Engagement-Metrics-KRC-Investors-Survey.pdf">CAQ’s institutional investor survey,</a> 80% of investors agreed that audit performance metrics without sufficient context are not adequate to evaluate a specific audit or firm. Investors consider a range of information sources, including audit reports, firm transparency and quality reports, PCAOB inspection reports, and firm reputation.

<span class="cf0">[custom_quote text="80% of investors agreed that audit performance metrics without sufficient context are not adequate to evaluate a specific audit or firm."]</span>
<h3><strong>Looking Ahead: Enhancing the Value of Inspection Reports</strong></h3>
The public company audit profession recognizes there are ongoing opportunities to enhance the usefulness of inspection reporting for investors and other stakeholders to continue to promote confidence in the U.S. capital markets.

The CAQ supports an inspection program that remains focused on strengthening audit quality while evolving toward greater consistency, transparency, a stronger focus on firms' quality control systems, and more decision-useful reporting. We encourage the PCAOB to continue pursuing improvements that enhance the effectiveness, clarity, and comparability of inspection results.

Recent inspection results suggest encouraging progress in several areas reviewed by the PCAOB, but as business environments, technologies, and risks evolve, achieving and maintaining audit quality requires ongoing vigilance. Continued collaboration among regulators, the public company audit profession, and investors can help ensure the inspection program remains an effective accountability tool that strengthens audit quality and supports confidence in U.S. capital markets.

<em>Follow the CAQ on </em><a href="https://www.linkedin.com/company/center-for-audit-quality"><em>LinkedIn</em></a><em> and </em><a href="https://substack.com/@auditeffect"><em>Substack</em></a><em> for the latest news on the public company audit profession and capital markets. </em>

PCAOB Inspection Reports: Understanding their Value and Context

Auditors

Capital markets run on trust. Every day, investors, lenders, retirement savers, and policymakers make decisions based on information reported by public companies. Those decisions depend on confidence that the information is reliable and trusted. Auditor objectivity, supported by robust regulatory...

Capital markets run on trust. Every day, investors, lenders, retirement savers, and policymakers make decisions based on information reported by public companies. Those decisions depend on confidence that the information is reliable and trusted. Auditor objectivity, supported by robust regulatory standards and a profession-wide commitment to the public interest, is critical to building that confidence.

In 2002, Congress passed the Sarbanes-Oxley Act (<a href="https://www.thecaq.org/sox-the-landmark-legislation-that-strengthened-financial-reporting-and-audit-quality">SOX)</a> in response to financial scandals that eroded public trust and exposed weaknesses in financial reporting oversight. The law created the Public Company Accounting Oversight Board (PCAOB), strengthened auditor independence requirements, and elevated the oversight role of the audit committee, among other reforms designed to <a href="https://www.thecaq.org/aia-how-auditor-expertise-strengthens-us-capital-markets">protect capital market stakeholders</a>.

Today, SOX's independence requirements remain a cornerstone of audit quality. By helping ensure that external auditors are objective and free from conflicts of interest, these requirements enable trust in company-reported information.

The public company audit profession continues to recognize the role of auditor independence in reliable financial reporting, investor confidence, and well-functioning capital markets, especially as new technologies and emerging risks transform the economy.

<span class="cf0">[custom_quote text="Today, SOX's independence requirements remain a cornerstone of audit quality."]</span>
<h3><strong>An Active Discipline</strong></h3>
Auditor independence is more than a compliance exercise. Maintaining objectivity and independence requires ongoing vigilance, supported by a firm's culture and system of quality control. By continually reinforcing objectivity, auditors help ensure that investors and other stakeholders can make decisions with confidence that the information they are using is reliable.

Andy Gripp, Lead Partner for Ethics, Independence, and Conflicts at Crowe, says that audit firms take a disciplined approach to integrate independence safeguards across the organization. "Effectively monitoring independence is a discipline, supported by a culture, systems, and processes that protect objectivity," he says. <a href="https://www.thecaq.org/independence">Independence</a> gives capital market stakeholders confidence that an auditor's conclusions are grounded in professional judgment, evidence, and skepticism, safeguards that are embedded throughout a firm's policies and oversight processes even when they aren't directly visible.

<span class="cf0">[custom_quote text="By continually reinforcing objectivity, auditors help ensure that investors and other stakeholders can make decisions with confidence that the information they are using is reliable."]</span>
<h3><strong>A Shared Responsibility</strong></h3>
SOX recognized that auditor independence is a shared responsibility among the company, external auditors, audit committees, and regulators. Each plays a distinct role in protecting the integrity of the financial reporting process:
<ul>
 	<li>A company’s management must provide all relevant information to the auditor in a timely manner, including as appropriate, potential mergers and acquisitions, etc.</li>
 	<li>Auditors apply professional judgment and consistent standards to verify and validate company information.</li>
 	<li>Audit committees are directly responsible for the appointment, compensation, retention, and oversight of the external auditor.</li>
 	<li>Regulators develop and implement standards and regulations to prevent conflicts of interest, such as limitations on what non-audit services an auditor can provide to the companies they audit.</li>
</ul>
By establishing clear responsibilities across the reporting ecosystem, SOX created a structure to support high-quality audits and promote an objective verification of company information.

Alongside ensuring there are no conflicts of interest, firms must also consider how their arrangements appear to those outside the organization. Dan Felgner, National Office Leader for PwC US Quality, says the profession is dedicated to their commitment to maintain auditor independence and recognizes their role in maintaining audit quality. “We remain committed to maintaining independence in both fact and appearance, which underpins our ability to exercise professional skepticism and draw objective conclusions.”

Over the past two decades, firms have continued to strengthen the policies, oversight mechanisms, and internal safeguards that preserve objectivity as client relationships, business models, and technologies evolve.

<span class="cf0">[custom_quote text="By establishing clear responsibilities across the reporting ecosystem, SOX created a structure to support high-quality audits and promote an objective verification of company information."]</span>
<h3><strong>Today's Evolving Risk Environment</strong></h3>
Advances in technology, from AI to advanced data analytics, are <a href="https://www.thecaq.org/corporate-reporting-trends">transforming</a> how both companies and auditors gather, analyze, and evaluate information, but the <a href="https://www.thecaq.org/aia-enhancing-investor-confidence-in-an-era-of-ai-driven-innovation">need for auditor objectivity remains unchanged</a>. Trust in technological innovations requires challenging AI-driven outputs, evaluating evidence, and reaching unbiased conclusions. Independent auditors pair objectivity with expertise and rigor so that stakeholders can clearly understand how technology is being used.

Laura McCracken, an Audit &amp; Assurance partner and Regulatory Leader at Deloitte, <a href="https://www.thecaq.org/aia-independence-as-the-foundation-for-trust-in-an-evolving-market">describes</a> the relationship between auditors and AI as a collaboration, not separate workstreams. “Technology elevates the audit; it does not replace the need for independence, objectivity, and professional judgment.”

Audit firms continue to invest in independence, transparency, and governance alongside new technologies. Innovation and independence work together, rather than compete, to strengthen trust in decision-useful information.

<span class="cf0">[custom_quote text="Audit firms continue to invest in independence, transparency, and governance alongside new technologies. "]</span>
<h3><strong>The Audit Effect</strong></h3>
Independent audits underpin the reliability of information used by investors, audit committees, policymakers, and other stakeholders for informed decision-making. Katrina Kimpel, EY's Americas Vice Chair of Professional Practice, says that stakeholder confidence is earned through objectivity. "Transparency and independence remain foundational to promoting confidence in financial reporting and, in turn, the capital markets," she says.

That is the <a href="https://www.thecaq.org/AuditEffect">Audit Effect</a>: the chain that runs from auditor independence and reliable financial reporting to informed decision-making and strong capital markets. It's a reminder that auditor independence is more than a compliance exercise; it's a cornerstone of the trust that helps the capital markets function effectively.

<em>Learn more about the</em> <a href="https://www.thecaq.org/AuditEffect"><em>Audit Effect</em></a><em> and follow the </em><a href="https://www.linkedin.com/company/center-for-audit-quality/"><em>CAQ on LinkedIn</em></a><em> for the latest updates on the public company audit profession.</em>

How Independence Continues to Anchor Trust in the Capital Markets

Policymakers

Amy O’Connor is the Vice President, Public Affairs at the Center for Audit Quality. In this role, she oversees and implements the CAQ's strategy regarding external and internal communications, design, marketing, and outreach to capital markets stakeholders including investors, public company audit committees, issuers, and others.

O’Connor's experience includes founding Move the Shakers, a communications and public affairs consultancy. Previously, she served as Vice President at the Business Roundtable, where she implemented a digital public affairs and communications transformation that included rebranding the organization, establishing new digital initiatives and capabilities, and launching advocacy campaigns tied to sustainability and other key policy priorities. During her tenure at the Business Roundtable, the organization won a Public Affairs Council Innovation Award for communications innovation.

Prior to the Business Roundtable, O’Connor was Eli Lilly’s Senior Director for Communications, Digital &amp; Social Media. In that role, she specialized in engaging audiences, creating digital platforms designed to strengthen stakeholder experience and public trust, building third-party partnerships, and developing the company’s global capabilities in public affairs and crisis management. In 2014, O’Connor was named “40 Under 40” by <em>PR Week </em>magazine.

Amy is a graduate of University of Notre Dame and Georgetown’s McCourt School of Public Policy.

Amy O'Connor

Artificial intelligence is rapidly reshaping U.S. capital markets. Companies are embedding the technology deeper into their operations and business strategy, and consumers of corporate disclosures are increasingly using AI agents to analyze information, identify opportunities, and make investment decisions.

What was...

Artificial intelligence is rapidly reshaping U.S. capital markets. Companies are embedding the technology deeper into their operations and business strategy, and consumers of corporate disclosures are increasingly using AI agents to analyze information, identify opportunities, and make investment decisions.

What was just a few years ago viewed as an emerging technology is now a core part of investment research, with a majority of investors incorporating AI into their workflows and expecting its role to expand in the years ahead.

The CAQ’s latest <a href="https://www.thecaq.org/institutional-investor-survey">Institutional Investor Survey</a>, conducted in partnership with KRC Research, explores how U.S. institutional investors are using AI today and where they see its greatest potential. The findings reveal investors embracing AI’s ability to improve efficiency, accelerate analysis, and uncover insights, while still emphasizing the value of human judgment to provide decision-useful information.

Read on for key insights from the survey and what they reveal about the evolving intersection of AI, investor expectations, and the role of public company auditors.


<p class="pf0"><span class="cf0">[custom_quote text="The findings reveal investors embracing AI’s ability to improve efficiency, accelerate analysis, and uncover insights."]</span></p>

<h3><strong>AI Is Becoming the First "Set of Eyes" on Many Corporate Disclosures</strong></h3>
Nearly seven in ten survey respondents (68%) report extensive or moderate use of AI in their investment research, and 83% expect that use to grow over the next two years. AI is widely known for being able to more efficiently distill large amounts of information and data sets, enabling investors to find the most relevant information they need at a faster pace.

Currently, investors are primarily using AI for qualitative research, including:
<ul>
 	<li>Analyzing earnings calls;</li>
 	<li>Summarizing the MD&amp;A and risk analysis;</li>
 	<li>Extracting financial and operational metrics; and</li>
 	<li>Evaluating other qualitative disclosures.</li>
</ul>
While only 41% use AI regularly on the filings themselves, including 10-Ks and 10-Qs, this means that AI tools are increasingly serving as the first reviewer of corporate disclosures and will continue to do so as investors' use of AI grows.

Market participants may need to consider whether today's reporting framework is optimized for AI-enabled analysis. Investors have long relied on disclosures designed for human review, and those disclosures are increasingly being parsed and analyzed by machines. Clarity, consistency, and comparability may become even more important in today's AI-driven environment.

<img class="alignnone wp-image-17895 size-full" src="https://www.thecaq.org/wp-content/uploads/2026/07/2026_07_AiA-Investor-Survey-AI_Chart-A.png" alt="" width="2400" height="1254" />

Investors see efficiency as the greatest value of AI, which aligns with how audit partners are observing public companies use the technology. In the CAQ’s <a href="https://www.thecaq.org/audit-partner-pulse-survey">Spring 2026 Audit Partner Pulse Survey</a>, 56% of respondents report companies utilizing AI for process automation. Investors also see value in AI's ability to identify anomalies and non-obvious patterns that a human reviewer might miss.

As institutional investors rely on AI to help them make investment decisions more efficiently, the auditor's role becomes increasingly important in enhancing confidence that company disclosures are reliable, consistent, and decision-useful – qualities that benefit investors and the AI tools they employ.

<span class="cf0">[custom_quote text="Investors see efficiency as the greatest value of AI, which aligns with how audit partners are observing public companies use the technology."]</span>
<h3><strong>A Trust but Verify Approach</strong></h3>
While investors see the benefits of using AI in their role, they also emphasize a need to review AI-generated outputs. Even as investors' use of AI becomes more frequent, only 33% say they mostly or completely trust what their AI tools produce.

Their top concerns include hallucinations or incorrect outputs, data quality, and a lack of transparency into how conclusions are reached. All these issues can significantly impact the quality of information that supports capital allocation decisions, and in response, a majority of investors signal a "trust but verify" approach to AI-generated insights.

<img class="alignnone wp-image-17896 size-full" src="https://www.thecaq.org/wp-content/uploads/2026/07/2026_07_AiA-Investor-Survey-AI_Chart-B.png" alt="" width="2400" height="1254" />

Investors' approach reflects a foundational commitment of public company auditors: conclusions should be supported by objective evidence, not accepted at face value. Investors validating AI-generated insights before relying on them echoes how auditors evaluate information and independently assess whether it can be relied upon. As AI use grows as a research and decision-making tool, the auditor's role as an independent source of assurance will support a new age of investing.

<span class="cf0">[custom_quote text="Their top concerns include hallucinations or incorrect outputs, data quality, and a lack of transparency into how conclusions are reached."]</span>
<h3><strong>What This Means for Today's Capital Markets</strong></h3>
Institutional investors are increasingly embracing AI as a powerful research and analysis tool, but a significant minority, 40%, say the technology has limited or no role in decision-making today. The investing community is not a monolith, and this signals that many continue to rely on high-quality information, human expertise, and professional skepticism to turn insights into investment decisions.

In today's rapidly evolving markets, investors expect information that can be efficiently analyzed, compared, and evaluated. As AI adoption grows, trust and technology need to advance together. Organizations that understand this requirement and provide reliable, decision-critical information will be best positioned to meet the needs of investors and the broader economy.

Read the full <a href="https://www.thecaq.org/institutional-investor-survey">Institutional Investor Survey</a> and follow the CAQ on <a href="https://www.linkedin.com/company/center-for-audit-quality">LinkedIn</a> for the latest insights on issues impacting our capital markets.

How Investors are Using AI in the Decision-Making Process

Investors

This webinar is for audit committee members and those who work with and support audit committees in their financial reporting oversight role. Join PCAOB Board Member Steve Laughton and Weyerhaeuser Audit Committee Chair Sara Lewis for a discussion of the...

This webinar is for audit committee members and those who work with and support audit committees in their financial reporting oversight role. Join PCAOB Board Member Steve Laughton and Weyerhaeuser Audit Committee Chair Sara Lewis for a discussion of the PCAOB’s current priorities and initiatives, followed by a conversation on the practical implications for audit committee oversight. Topics will include the PCAOB’s efforts to modernize its inspection program; communications with audit committees; considerations of emerging risks, including AI and practical steps audit committees take to strengthen auditor oversight, and support audit quality.

<em><strong>Note:</strong> The live event is eligible for 1 CPE credit.</em>

PCAOB Developments & Priorities – What Audit Committees Need to Know

Audit Committee

Webinar

Event

This hour-long webcast showcases regulatory reporting issues facing public companies and their auditors. It features Kurt Hohl, SEC Chief Accountant and Heather Rosenberger, Chief Accountant in the SEC’s Division of Corporation Finance. Panelists discuss current initiatives underway at the SEC,...

This hour-long webcast showcases regulatory reporting issues facing public companies and their auditors. It features Kurt Hohl, SEC Chief Accountant and Heather Rosenberger, Chief Accountant in the SEC’s Division of Corporation Finance. Panelists discuss current initiatives underway at the SEC, including recent regulatory proposals.

<strong>This webcast was eligible for 1 CPE credit to those who attended the webcast live.</strong>

Audit Insider Webinar | July 2026

This webinar is for audit committee members and those who work with and support audit committees in their financial reporting oversight role continues our journey in exploring the evolution of AI in financial reporting and the audit.

 	How is AI...

This webinar is for audit committee members and those who work with and support audit committees in their financial reporting oversight role continues our journey in exploring the evolution of AI in financial reporting and the audit.
<ul>
 	<li>How is AI being used in financial reporting?</li>
 	<li>How is the use of AI in financial reporting impacting the audit?</li>
 	<li>How are auditors using AI in the audit?</li>
 	<li>How is the use of AI in financial reporting and the audit impacting audit committee oversight?</li>
</ul>

AI in Financial Reporting and Audit – What Audit Committees Need to Know

Audit Committee Effectiveness: A Webinar Series
Audit committees should regularly (at least annually) evaluate the external auditor in fulfilling their duty in order to make an informed recommendation to the board whether to retain the external auditor. Robust, two-way dialogue that...

<h4>Audit Committee Effectiveness: A Webinar Series</h4>
Audit committees should regularly (at least annually) evaluate the external auditor in fulfilling their duty in order to make an informed recommendation to the board whether to retain the external auditor. Robust, two-way dialogue that includes constructive feedback to the external auditor may improve audit quality and enhance the relationship between the audit committee and the external auditor.

Join us for a discussion from both sides of the aisle – audit committee members and the auditor – about how to effectively perform this assessment. We’ll discuss the just released 2025 update of the CAQ’s External Auditor Assessment Tool for Audit Committees.

<strong>Note</strong>: This webcast is eligible for 1 CPE credit to those who attend the webcast live.

<img class=" wp-image-12997 alignnone" src="https://thecaq.wpenginepowered.com/wp-content/uploads/2022/11/CAQ_NACD_400x150.png" alt="CAQ NACD" width="200" height="75" />

<em>Audit Committee Effectiveness: A Webinar Series is brought to you by the Center for Audit Quality and the National Association of Corporate Directors. The series explores key takeaways and insights from leaders in the financial reporting ecosystem alongside resources developed to aid audit committees and public company board members.</em>

External Auditor Assessment Webinar: Who, Why, What, When and How

Join the Anti-Fraud Collaboration (AFC) in our webcast to explore the pervasiveness and impact of fraud at U.S. public companies and gain insights into recent survey findings that shed light into the current fraud risk environment and leading practices for...

Join the Anti-Fraud Collaboration (AFC) in our webcast to explore the pervasiveness and impact of fraud at U.S. public companies and gain insights into recent survey findings that shed light into the current fraud risk environment and leading practices for fraud deterrence and detection. A panel of multi-stakeholder experts will discuss findings from a joint survey from ACFE-AFC on The Impact of Fraud at U.S. Public Companies and CAQ’s 2025 Institutional Investor Survey, and provide insights into the current level of fraud and fraud losses experienced by U.S. public companies, factors that contribute to and can mitigate the most prevalent fraud risks faced by companies in the current environment, identifying and assessing the likelihood and significance/magnitude of those factors, and areas of focus for enhancing the effectiveness of fraud deterrence and detection.

<a href="http://www.antifraudcollaboration.org"><img class="alignnone size-full wp-image-9863" src="https://www.thecaq.org/wp-content/uploads/2020/05/AFC-Logo_35px.png" alt="Anti-Fraud Collaboration Logo" width="265" height="35" /></a>

<em><strong>Note</strong>: The virtual event was eligible for 1 CPE credit.
</em>

The Impact of Fraud on U.S. Public Companies

Anti-Fraud

Washington, D.C., July 15, 2026 – The Center for Audit Quality (CAQ) today released its 2026 Spring Audit Partner Pulse Survey, the latest edition of its recurring report capturing insights from audit partners at the nation’s leading public company audit firms.

Now in its...

<b><span data-contrast="auto">Washington, D.C., July 15, 2026</span></b><span data-contrast="auto"> – The Center for Audit Quality (CAQ) today released its 2026 Spring Audit Partner Pulse Survey, the latest edition of its recurring report capturing insights from audit partners at the nation’s leading public company audit firms.</span>

<span data-contrast="auto">Now in its sixth year, the survey tracks how audit partners view the U.S. business environment over time, offering a unique, cross-industry perspective on economic conditions, emerging risks, and shifting business priorities.</span>

<span data-contrast="auto">Because audit partners work across industries and engage regularly with public companies, their perspectives provide a timely view into how organizations are navigating a business landscape shaped by both momentum and uncertainty. The Spring 2026 findings show organizations moving forward more deliberately, balancing a steady economic outlook with an increasingly complex risk environment.</span>

<span data-contrast="auto">A Steady Outlook, but a Changing Risk Landscape</span>
<ul>
 	<li><span data-contrast="auto">Audit partners report that overall sentiment toward the U.S. economy remains largely unchanged, with a neutral and cautiously optimistic views continuing to dominate.</span></li>
 	<li><span data-contrast="auto">While sentiment has stabilized, the persistence of neutrality reflects ongoing uncertainty as companies weigh a wide range of economic and geopolitical risks.</span></li>
 	<li><span data-contrast="auto">At the same time, organizations are not standing still. Audit partners report that companies are advancing with targeted investments in new technologies and strategic decision-making rather than remaining on hold.</span></li>
</ul>
<span data-contrast="auto">Evolving Risks Drive Strategic Focus</span>
<ul>
 	<li><span data-contrast="auto">Technology disruption and AI-related competitive pressures are now among the top risks facing companies, alongside cybersecurity concerns and geopolitical instability.</span></li>
 	<li><span data-contrast="auto">Companies are increasingly adapting their business strategies in real time. Thirty-nine percent of survey respondents report that their clients are actively seeking perspective on expected regulatory changes, underscoring the importance of understanding how policy development may affect business planning, reporting and risk oversight.</span></li>
</ul>
<span data-contrast="auto">AI and Technology Continue to Shape Business Priorities</span>
<ul>
 	<li><span data-contrast="auto">Investment in artificial intelligence remains a key priority, with companies focusing on practical implementation and integration across process automation, customer support, and predictive analysis.</span></li>
 	<li><span data-contrast="auto">As adoption expands, organizations are working through complex governance, oversight, and risk management challenges tied to emerging technologies. Nearly 90% of respondents characterized the maturity of AI governance at their largest client as either “developing” or “early stage.”</span></li>
 	<li><span data-contrast="auto">Audit partners report that companies continue to balance innovation with controls, emphasizing long-term value alongside responsible deployment.</span></li>
</ul>
<span data-contrast="auto">“This edition of our Audit Partner Pulse Survey highlights a shift from holding steady to moving forward with greater intent, even as uncertainty remains,” said Amy O’Connor, Vice President of Public Affairs, Center for Audit Quality. “That perspective can serve as a useful guide for investors, policymakers, and business leaders making decisions in a complex environment and reflects what makes assurance so valuable: audit partners bring a broad, cross-industry perspective grounded in real-time engagement with companies.”</span>

<span data-contrast="auto"><a href="https://www.thecaq.org/audit-partner-pulse-survey">Download the Spring 2026 Audit Partner Pulse Survey</a> to see the full results.
</span>

<b><span data-contrast="auto">+++</span></b><span data-ccp-props="{}"> </span>

<b><span data-contrast="auto">About the Center for Audit Quality</span></b><span data-ccp-props="{}"> </span>

<span data-contrast="auto">The CAQ champions the public interest in the capital markets by:</span><span data-ccp-props="{}"> </span>
<ul>
 	<li><span data-contrast="auto">Elevating the quality, credibility, and transparency of public company audits;</span><span data-ccp-props="{}"> </span></li>
 	<li><span data-contrast="auto">Advancing critical issues affecting public company audits;</span><span data-ccp-props="{}"> </span></li>
 	<li><span data-contrast="auto">Driving innovation in assurance; and</span><span data-ccp-props="{}"> </span></li>
 	<li><span data-contrast="auto">Providing a collaborative forum for capital market stakeholders to address evolving needs and challenges.</span><span data-ccp-props="{}"> </span></li>
</ul>
<span data-contrast="auto">As the voice of the public company audit profession, we work to instill trust in corporate reporting and the integrity of the auditing process, ultimately empowering investors, companies, and society as a whole.</span><span data-ccp-props="{}"> </span>

Audit Partners See Companies Moving Forward with Greater Intent as Evolving Risks Reshape Strategy, CAQ Survey Finds

Press Releases

The CAQ’s Julie Bell Lindsay announced her decision to step down following seven years as CAQ’s CEO. “I’m incredibly proud of everything we’ve accomplished to advance the quality, integrity, and trust in public company audits and in the audit profession....

The CAQ’s Julie Bell Lindsay announced her decision to step down following seven years as CAQ’s CEO. “I’m incredibly proud of everything we’ve accomplished to advance the quality, integrity, and trust in public company audits and in the audit profession. It’s been an honor for me to work with the amazing team at the CAQ over the last seven years, and I am confident in their ability to build on the momentum we have created and continue to represent the public company audit profession and its important role in our capital markets. But, after much contemplation, I believe the timing is right to begin a new chapter in my career and life.”

The CAQ Governing Board has appointed fellow board member Mark Koziel, CEO of AICPA, as temporary, interim CEO, effective immediately. Julie will be working with Mark through the end of April to aid in the transition. Koziel praised Lindsay’s tenure: “Julie has helped ensure CAQ is a leading voice in advancing excellence, transparency, and trust in the public audit profession. The CAQ board joins me in thanking Julie for her years of service. Her work has made a lasting and positive impact in elevating audit quality and our profession.”

Through his role on the Governing Board, Mark has deep familiarity with the CAQ and is a passionate advocate for its role in the public company audit profession. Koziel added, “I look forward to working with the CAQ team during this transition to ensure organizational continuity and supporting the CAQ board in the search process. The CAQ’s mission to advance audit quality and investor confidence continues uninterrupted.”

Statement on CAQ Leadership Transition

Statements

The Center for Audit Quality (CAQ) congratulates the newly appointed and returning members to the Public Company Accounting Oversight Board. We look forward to working collaboratively with the PCAOB as they carry out their work. The CAQ remains committed to...

The Center for Audit Quality (CAQ) congratulates the newly appointed and returning members to the Public Company Accounting Oversight Board. We look forward to working collaboratively with the PCAOB as they carry out their work. The CAQ remains committed to engaging constructively with the PCAOB to support a robust audit environment that serves investors, public companies, and the capital markets.

+++

About the Center for Audit Quality

The CAQ champions the public interest in the capital markets by:
<ul>
 	<li>Elevating the quality, credibility, and transparency of public company audits;</li>
 	<li>Advancing critical issues affecting public company audits;</li>
 	<li>Driving innovation in assurance; and</li>
 	<li>Providing a collaborative forum for capital market stakeholders to address evolving needs and challenges.</li>
</ul>
As the voice of the public company audit profession, we work to instill trust in corporate reporting and the integrity of the auditing process, ultimately empowering investors, companies, and society as a whole.

Statement on Incoming PCAOB Chair

SEC Regulations

Washington DC (December 4, 2025) – Today, the Center for Audit Quality (CAQ) and Ideagen Audit Analytics released the 12th annual Audit Committee Transparency Barometer Report. The report, which has been conducted since 2014, analyzes audit committee disclosures of companies...

<b><span data-contrast="auto">Washington DC (December 4, 2025)</span></b><span data-contrast="auto"> – Today, the Center for Audit Quality (CAQ) and Ideagen Audit Analytics released the 12th annual Audit Committee Transparency Barometer Report. The report, which has been conducted since 2014, analyzes audit committee disclosures of companies in the S&amp;P 1500.</span><span data-ccp-props="{}"> </span>

<span data-contrast="auto">As audit committees navigate emerging risks including economic disruption and the rapid integration of artificial intelligence, investors need insights into board composition, expertise, and oversight processes. This year’s Barometer shows that while skills matrix disclosure continues at high rates and disclosure of cybersecurity expertise on boards has grown, most disclosure areas have stagnated or declined, providing audit committees with an opportunity to enhance transparency about their evolving oversight responsibilities.</span><span data-ccp-props="{}"> </span>

<span data-contrast="auto">Key findings of the report include: </span><span data-ccp-props="{&quot;335559739&quot;:0}"> </span>
<ul>
 	<li aria-setsize="-1" data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" data-aria-posinset="1" data-aria-level="1"><span data-contrast="auto">90% of S&amp;P 500 companies disclosed the board of directors' skills matrix, an increase from 85% in 2024. S&amp;P MidCap companies (80%) and S&amp;P SmallCap companies (70%) also showed slight increases.</span><span data-ccp-props="{&quot;335559739&quot;:0}"> </span></li>
</ul>
<ul>
 	<li aria-setsize="-1" data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" data-aria-posinset="2" data-aria-level="1"><span data-contrast="auto">65% of S&amp;P 500 boards disclosed they have a cybersecurity expert—representing a 5-percentage point increase from 2024.</span><span data-ccp-props="{&quot;335559739&quot;:0}"> </span></li>
</ul>
<ul>
 	<li aria-setsize="-1" data-leveltext="" data-font="Symbol" data-listid="2" data-list-defn-props="{&quot;335552541&quot;:1,&quot;335559685&quot;:720,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}" data-aria-posinset="3" data-aria-level="1"><span data-contrast="auto">Stagnation and decline of audit committee disclosures were observed across several measures, including (for S&amp;P 500 companies): disclosure of the annual evaluation of the external auditor (decreased from 39% to 38%); considerations in appointing or (re)appointing the external auditor (remained flat at 50%); and factors contributing to the selection of the audit partner (decreased from 17% to 16%).</span><span data-ccp-props="{&quot;335559739&quot;:0}"> </span></li>
</ul>
<span data-contrast="auto">"When disruption accelerates, disclosures cannot stand still," said Julie Bell Lindsay, CEO of the Center for Audit Quality. "Audit committees perform a key role in our capital markets, from overseeing the external auditor to monitoring company financial reporting and internal controls and serving as an effective check on management.  Meaningful, investor-focused disclosure is one of the most powerful tools audit committees have to tell their story and demonstrate this important role. Each proxy season presents an important opportunity for audit committees to more clearly communicate how they oversee risk and uphold audit quality, strengthening investor confidence in a rapidly changing environment."</span><span data-ccp-props="{&quot;335559739&quot;:0}"> </span>

<span data-contrast="auto">"As audit committee responsibilities continue to expand, the Audit Committee Transparency Barometer provides critical insights into how committees are adapting their disclosures and where there is room for improvement," said Michael Nohrden, VP Strategy Audit and Risk for Ideagen. "Our ongoing collaboration with the CAQ ensures audit committees have access to robust data and peer comparisons across the S&amp;P 1500, empowering them to strengthen their communications with stakeholders. With emerging risks like AI adoption and cybersecurity threats reshaping oversight responsibilities, transparent disclosure has never been more important."</span><span data-ccp-props="{}"> </span>

<span data-contrast="auto">The full report is available to read </span><a href="https://www.thecaq.org/audit-committee-transparency-barometer"><span data-contrast="none">here</span></a><span data-contrast="auto">. </span><span data-ccp-props="{}"> </span>

+++

<strong>About the Center for Audit Quality</strong>

The CAQ champions the public interest in the capital markets by:
<ul>
 	<li>Elevating the quality, credibility, and transparency of public company audits;</li>
 	<li>Advancing critical issues affecting public company audits;</li>
 	<li>Driving innovation in assurance; and</li>
 	<li>Providing a collaborative forum for capital market stakeholders to address evolving needs and challenges.</li>
</ul>
As the voice of the public company audit profession, we work to instill trust in corporate reporting and the integrity of the auditing process, ultimately empowering investors, companies, and society as a whole.

<b><span data-contrast="auto">About Ideagen Audit Analytics</span></b> <span data-ccp-props="{}"> </span>

<span data-contrast="auto">Ideagen Audit Analytics is an independent research provider that enables the accounting, legal, and investment communities to analyze auditor market intelligence, public company disclosure trends, and risk indicators. For more information, email info@auditanalytics.com or call 508-476-7007.  </span><span data-ccp-props="{}"> </span>

Annual Audit Committee Disclosure Barometer Reveals Stagnation in Key Disclosure Areas Despite Period of Disruption

Washington D.C., June 5, 2025 – The Center for Audit Quality (CAQ) has released its Spring 2025 Audit Partner Pulse Survey, providing insights from audit partners at the nation’s leading public company audit firms. Now in its fourth year, the...

<strong>Washington D.C., June 5, 2025</strong> – The Center for Audit Quality (CAQ) has released its Spring 2025 Audit Partner Pulse Survey, providing insights from audit partners at the nation’s leading public company audit firms. Now in its fourth year, the survey captures audit partners’ views on the future of the U.S. economy, evolving business risks, and workforce trends. As trusted experts with a front-row seat to corporate strategy and performance, audit partners provide a unique lens into how U.S. companies are navigating a period marked by economic uncertainty, geopolitical tension, and rapid technological change.

Key findings from the report include:

<strong>Increasing Economic Pessimism</strong>
<ul>
 	<li>The percentage of audit partners expressing pessimism about the U.S. economy surged from 10% in Fall 2024 to 44% today, while optimism dropped by more than half, from 38% to 15%.</li>
 	<li>Fear of a potential recession, ongoing geopolitical instability and trade uncertainties have prompted companies to double down on financial performance, cost management, and risk mitigation strategies.</li>
</ul>
<strong>Shifting Workforce Strategies</strong>
<ul>
 	<li>While many companies are reducing headcount, they are simultaneously investing in upskilling existing employees.</li>
 	<li>Respondents also underscored the growing importance of strong anti-fraud cultures, especially as economic stressors heighten risk across industries.</li>
</ul>
<strong>Integration of New Technologies</strong>
<ul>
 	<li>AI adoption continues to grow across industries, primarily to improve customer service and streamline internal operations.</li>
 	<li>Despite increasing regulatory attention and high-profile initiatives like the SEC’s new Crypto Task Force, audit partners report limited cryptocurrency-related investments among public companies.</li>
</ul>
“Audit partners offer a valuable window into today’s complex business environment, helping us better understand the challenges companies face and the strategies they’re using to move forward,” said Julie Bell Lindsay, Chief Executive Officer, CAQ. “Despite economic uncertainty, it’s encouraging to see companies investing in innovation, upskilling their workforce, and strengthening cultures of integrity as they build a foundation for long-term resilience and growth.”

Download the <a href="https://www.thecaq.org/audit-partner-pulse-survey">Spring 2025 Audit Partner Pulse Survey</a> to see the full results.

+++

<strong>About the Center for Audit Quality</strong>

The CAQ champions the public interest in the capital markets by:
<ul>
 	<li>Elevating the quality, credibility, and transparency of public company audits;</li>
 	<li>Advancing critical issues affecting public company audits;</li>
 	<li>Driving innovation in assurance; and</li>
 	<li>Providing a collaborative forum for capital market stakeholders to address evolving needs and challenges.</li>
</ul>
As the voice of the public company audit profession, we work to instill trust in corporate reporting and the integrity of the auditing process, ultimately empowering investors, companies, and society as a whole.

Audit partners say economic uncertainty and geopolitical risks rise, while companies continue integrating AI to improve customer experience, according to latest survey.

This report highlights top priorities identified by surveyed audit committee members as the regulatory environment grows in complexity. 
...

This report highlights top priorities identified by surveyed audit committee members as the regulatory environment grows in complexity. 


Audit Committee Practices Report: Common Threads Across Audit Committees

Publications

As part of the Center for Audit Quality’s (CAQ) ongoing effort to keep members and stakeholders informed on significant public policy and accounting matters, we are pleased to offer the Public Policy and Technical Alert (PPTA).

Each month, the PPTA highlights...

<img class="wp-image-17248 aligncenter" src="https://www.thecaq.org/wp-content/uploads/2026/02/2026_Emails_Headers_PPTA_V5.png" alt="" width="650" height="163" />
<table id="templateContainer" border="0" cellspacing="0" cellpadding="0">
<tbody>
<tr>
<td align="center" valign="top">
<table id="templateBody" border="0" width="100%" cellspacing="0" cellpadding="0">
<tbody>
<tr>
<td class="bodyContent" align="left" valign="top">
<div><strong>As part of the Center for Audit Quality’s (CAQ) ongoing effort to keep members and stakeholders informed on significant public policy and accounting matters, we are pleased to offer the Public Policy and Technical Alert (PPTA).</strong>

Each month, the PPTA highlights and examines the regulatory, standard-setting, legislative, and broader financial reporting developments impacting the public company audit profession. Please note that the PPTA is intended as general information and should not be relied upon as being definitive or all-inclusive. The CAQ encourages member firms to refer to the rules, standards, guidance, and other resources in their entirety at the hyperlinks provided below. All entities should carefully evaluate which requirements apply to their respective organizations.

<strong>Was this email forwarded to you?</strong> <a href="https://www.thecaq.org/register">Create your CAQ Dashboard</a> and sign up for our newsletters so that you never miss an update from the CAQ.

<hr />

</div>
<h2>In This Issue</h2>
<img src="https://go.thecaq.org/l/834983/2026-01-13/3svt4t/834983/1768330566hSIgpj9C/2026_PPTA_Section_Header_SEC.png" alt="SEC" width="127" height="50" border="0" />
<h3><b>Updated Statement Regarding the Division of Corporation Finance's Role in the Exchange Act Rule 14a-8 Process</b></h3>
The SEC <a href="https://www.sec.gov/newsroom/speeches-statements/corpfin-statement-rule-14a-8-process-081426">issued</a> an updated statement regarding the Division of Corporation Finance's role in the Exchange Act Rule 14a-8 process.
<h3><b>SEC Proposes New Regulation Crypto Assets</b></h3>
The SEC <a href="https://www.sec.gov/newsroom/press-releases/2026-76-sec-proposes-new-regulation-crypto-assets">announced</a> that it proposed new rules, titled <i>Regulation Crypto Assets</i>, that would create a clear and fit-for-purpose framework for certain investment contracts involving crypto assets.

​​<img src="https://go.thecaq.org/l/834983/2026-01-13/3svt4j/834983/1768330566B8HKUEyg/2026_PPTA_Section_Header_PCAOB.png" alt="PCAOB" width="174" height="50" border="0" />
<h3><b>Kyle S. Hauptman Sworn In as PCAOB Board Member</b></h3>
The PCAOB <a href="https://pcaobus.org/news-events/news-releases/news-release-detail/kyle-s.-hauptman-sworn-in-as-pcaob-board-member">announced</a> that Kyle S. Hauptman was sworn in as a Board Member. His current term will expire on October 24, 2029.
<h3><b>PCAOB Posts New Resource to Help Auditors Implement Quality Control Standard</b></h3>
The PCAOB <a href="https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-posts-new-resource-to-help-auditors-implement-quality-control-standard">released</a> QC 1000 Questions and Answers, a new staff resource that provides answers to questions about certain matters related to the implementation of QC 1000, <i>A Firm's System of Quality Control</i>, ahead of the standard's December 15, 2026, effective date.
<h3><b>PCAOB Board Members Laughton and Botic to Host Forums in Denver and San Francisco for Auditors of Small Businesses and Auditors of Broker-Dealers</b></h3>
The PCAOB announced details for two in-person PCAOB forums for auditors of small businesses and auditors of broker-dealers to be hosted by <a href="https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-board-member-laughton-to-host-forum-in-denver-for-auditors-of-small-businesses-and-auditors-of-broker-dealers">Board Member Steven D. Laughton</a> on Sept. 18, 2026 at the Grant Hyatt Denver and <a href="https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-board-member-botic-to-host-forum-in-san-francisco-for-auditors-of-small-businesses-and-auditors-of-broker-dealers">Board Member George R. Botic</a> on Sept. 22, 2026 at the University of San Francisco. There is no fee to attend either forum, but advance registration is required. While the event is in-person only, a recording of the event will be made available on the PCAOB's website.
<h3><b>PCAOB Posts Discussion Materials From Summer 2026 Meetings of the Inspections Modernization Council (IMC)</b></h3>
The PCAOB <a href="https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-posts-discussion-materials-from-summer-2026-meetings-of-the-inspections-modernization-council">posted</a> select materials shared for discussion purposes with the IMC for its meetings in July and August 2026. The discussion materials — which address topics including the development of a QC-informed inspection approach, use of technology, inspection reporting, and remediation — are available at the IMC's page on the PCAOB website.

<img src="https://go.thecaq.org/l/834983/2026-01-13/3svt4m/834983/1768330566zoLP4JdT/2026_PPTA_Section_Header_FASB.png" alt="FASB" width="144" height="50" border="0" />
<h3><b>FASB Issues 2026 Investor Outreach Report</b></h3>
The FASB <a href="https://fasb.org/news-and-meetings/in-the-news/fasb-issues-2026-investor-outreach-report-425101">issued</a> its <a href="https://fasb.org/page/showpdf?path=2026%20Investor%20Outreach%20Report.pdf&amp;title=2026%20FASB%20Investor%20Outreach%20Report"><i>2026 Investor Outreach Report</i></a>. The report also provides updates on the FASB's Investor Advisory Committee.
<h3><b>FASB Seeks Public Comment on Proposal to Enhance Cash Equivalents Disclosures and Clarify the Cash Equivalents Evaluation for Certain Digital Assets</b></h3>
The FASB <a href="https://fasb.org/news-and-meetings/in-the-news/fasb-seeks-public-comment-on-proposal-to-enhance-cash-equivalents-disclosures-and-clarify-the-cash-equivalents-evaluation-for-certain-digital-assets-425287">published</a> a proposed Accounting Standards Update (ASU) intended to clarify how the current definition of cash equivalents applies to certain digital assets, such as stablecoins, and to increase transparency about the significant components of cash equivalents. Stakeholders are encouraged to review and provide comments on the proposed ASU by November 19, 2026.
<h3><b>Financial Accounting Foundation (FAF) Appoints Hillary H. Salo as Next Chair of the FASB and Announces Call for FASB Member</b></h3>
The Board of Trustees of the Financial Accounting Foundation (FAF) <a href="https://accountingfoundation.org/news-and-meetings/in-the-news/financial-accounting-foundation-appoints-hillary-h-salo-as-next-chair-of-the-financial-accounting-standards-board-and-announces-call-for-fasb-member-nominations-425292">announced</a> the appointment of Hillary H. Salo as the next chair of the FASB. Her term as chair will begin July 1, 2027, and conclude June 30, 2034. Salo currently serves as Vice Chair of the FASB and chair of the Emerging Issues Task Force and will succeed Richard R. Jones, whose term concludes June 30, 2027.

​​​​​<img src="https://go.thecaq.org/l/834983/2026-01-13/3svt4b/834983/1768330566nOgNlohk/2026_PPTA_Section_Header_AICPA.png" alt="AICPA" width="161" height="50" border="0" />
<h3><b>Revised Definition of Attest Engagement Team in the AICPA Code of Professional Conduct</b></h3>
The AICPA Professional Ethics Executive Committee (PEEC) <a href="https://www.aicpa-cima.com/news/download/revised-def-engagement-team-2026">adopted</a> a revised definition of attest engagement team in the AICPA Code of Professional Conduct at its August 2026 meeting. The effective date is December 15, 2026. Early implementation is allowed.
<h3><b>New Auditing Standard Clarifies and Enhances CPAs' Responsibilities Relating to Fraud in a Financial Statement</b></h3>
The AICPA's Auditing Standards Board (ASB) <a href="https://www.aicpa-cima.com/news/article/new-auditing-standard-clarifies-and-enhances-cpas-responsibilities-relating-to-fraud-in-a-financial-statement-audit">approved</a> a new standard that clarifies and enhances auditors' responsibilities relating to fraud or suspected fraud in a financial statement audit. The ASB's adoption of Statement on Auditing Standards (SAS) No. 151, <i>The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements</i>, supersedes SAS No. 122, <i>Statements on Auditing Standards: Clarification and Recodification</i>, as amended (Section 240, <i>Consideration of Fraud in a Financial Statement Audit</i>), and amends several other standards. The final version of the standard is expected to be posted online in October. SAS No. 151 will be effective for audits of financial statements for periods ending on or after Dec. 15, 2028, although firms can implement it earlier.
<h3><b>AICPA Provides New Guidance on Stablecoins, Mining Revenue, and Current Auditing Standards</b></h3>
The AICPA <a href="https://www.aicpa-cima.com/news/article/aicpa-provides-new-guidance-on-stablecoins-mining-revenue-and-current-auditing-standards">released</a> an updated version of its practice aid, <i>Accounting for and Auditing of Digital Assets</i>, providing accounting and auditing professionals with new guidance addressing emerging developments in the digital asset ecosystem, including accounting for stablecoin issuers, auditing mining revenue arrangements, and updates for recently effective auditing standards. The August 2026 update includes several significant enhancements:
<ul>
 	<li>New guidance for stablecoin issuers</li>
 	<li>New auditing guidance for mining revenue</li>
 	<li>Updated for current auditing standards</li>
 	<li>Additional enhancements</li>
</ul>
<img src="https://go.thecaq.org/l/834983/2026-01-13/3svt4f/834983/1768330566ehOOedbO/2026_PPTA_Section_Header_International.png" alt="International" width="262" height="50" border="0" />
<h3><b>International Auditing and Assurance Standards Board (IAASB) Proposes Revisions to Core Standards to Enhance Risk-Based Audit Framework and Address Technological Advances</b></h3>
The IAASB <a href="https://www.iaasb.org/news-events/2026-08/iaasb-proposes-revisions-core-standards-enhance-risk-based-audit-framework-and-address-technological">released</a> for public consultation proposed revisions to three International Standards on Auditing (ISAs): ISA 330, <i>The Auditor's Responses to Assessed Risks</i>; ISA 500, <i>Audit Evidence</i>; and ISA 520, <i>Analytical Procedures</i>. The proposed revisions establish a comprehensive basis for auditors' judgments about audit evidence, including:
<ul>
 	<li>a revised definition of audit evidence to reflect today's digital environment;</li>
 	<li>greater emphasis on the intended purposes of audit procedures;</li>
 	<li>strengthened requirements for evaluating the relevance and reliability of information used as audit evidence;</li>
 	<li>clarification of key concepts; and</li>
 	<li>reinforced application of professional skepticism throughout the audit.</li>
</ul>
Responses from stakeholders are requested by December 15, 2026. A new User Consultation Survey will be open during this period as well. The IAASB will also host a two-part global webinar series open to all interested stakeholders.
<h3><b>New Podcast on the </b><b><i>IFRS for SMEs</i></b><b> Accounting Standard</b></h3>
The IFRS Foundation <a href="https://www.ifrs.org/news-and-events/podcasts/#ifrs-for-smes-accounting-standard-podcasts">announced</a> that a new podcast on the <i>IFRS for</i> small and medium-sized entities (<i>SMEs</i>) Accounting Standard is available.
<h3><b>Preparing for IFRS 20 Implementation</b></h3>
The IFRS Foundation <a href="https://www.ifrs.org/supporting-implementation/supporting-materials-by-ifrs-standards/ifrs-20/preparing-for-ifrs-20-implementation/">shared</a> videos on preparing for IFRS 20 <i>Regulatory Assets and Regulatory Liabilities</i> in English, Brazilian Portuguese, and Spanish.

<img src="https://go.thecaq.org/l/834983/2026-01-13/3svt4q/834983/1768330566Zh26nukl/2026_PPTA_Section_Header_CAQ.png" alt="CAQ" width="136" height="50" border="0" />
<h3><b>Comment Letter to the PCAOB on Standard Setting</b></h3>
The CAQ <a href="https://www.thecaq.org/comment-letter-to-the-pcaob-on-standard-setting?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=PPTA%20August%2026">submitted</a> a comment letter to the PCAOB on its proposal, <i>Request for Public Comment on PCAOB Standard Setting</i>. The CAQ expresses support for a publicly available conceptual framework grounded in transparency, stakeholder engagement, rigorous analysis, effective implementation and post-implementation support, and domestic and international coordination. The CAQ recommends continuing research on data and technology, including digital assets, and prioritizing projects related to NOCLAR and fraud, auditor independence, and going concern. The CAQ also provides observations regarding the potential impact of the SEC's semiannual reporting proposal on PCAOB standards.
<h3><b>Fraud Risk Considerations in 2026: Key Takeaways for the Financial Reporting Ecosystem</b></h3>
The CAQ <a href="https://antifraudcollaboration.org/fraud-risk-considerations-in-2026/">shared</a> an article written by Desiré Carroll, CPA, CA(SA), Senior Director, Professional Practice on the evolving fraud risk environment that emphasizes the importance of remaining vigilant amid changing regulatory conditions, exercising sound judgment, fostering a culture that mitigates fraud risk, and thoughtfully governing the use of artificial intelligence.
<h3><b>PCAOB Inspection Reports: Understanding Their Value and Context</b></h3>
The CAQ <a href="https://www.thecaq.org/aia-pcaob-inspection-reports-understanding-their-value-and-context?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=PPTA%20August%2026">posted</a> an article written by Dennis McGowan, CPA, Vice President, Professional Practice and Anti-Fraud Initiatives, on the importance of understanding what PCAOB inspection reports are designed to measure as stakeholders review the latest findings in more detail. McGowan discusses the following topics:
<ul>
 	<li>An Important Accountability Tool</li>
 	<li>Reports Should Be Viewed in Context</li>
 	<li>Looking Ahead: Enhancing the Value of Inspection Reports</li>
</ul>
<h3><b>Shaping the Future of Assurance: Advancing AI in the Audit</b></h3>
The CAQ <a href="https://www.thecaq.org/aia-shaping-the-future-of-assurance-advancing-ai-in-the-audit?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=PPTA%20August%2026">posted</a> an article written by Troy Merkel, Assurance Digital Leader, RSM LLP, on how evolution is accelerating in the public company audit profession as firms continue applying artificial intelligence, automation, and connected digital workflows. RSM has added three innovations to its digital audit ecosystem within the past year—Ask Luca, Microsoft M365 Copilot, and RSM Luca Resourcing. Merkel discusses the following topics:
<ul>
 	<li>Ask Luca: trusted guidance where auditors work</li>
 	<li>AI expanding capacity for higher-value work</li>
 	<li>RSM Luca Resourcing: connecting people, projects and execution</li>
 	<li>Building confidence in a changing market</li>
</ul>
<h3><b>Highlights of CAQ SEC Regulations Committee Joint Meeting with the SEC Staff</b></h3>
The CAQ <a href="https://thecaq.wpenginepowered.com/wp-content/uploads/2026/08/June-9-2026-Joint-Meeting-HLs-FINAL-for-posting-8-27-26.pdf?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=PPTA%20August%2026">shared</a> highlights of the June 2026 Joint Meeting of the SEC Regulations Committee and the SEC Staff. Topics addressed at the meeting include:
<ul>
 	<li>Waiver and Interpretive Requests</li>
 	<li>Clarifications on the definition of a business under S-X Rule 11-01(d)</li>
 	<li>Financial statements and pro forma requirements in a registration statement (offering proceeds to be used to fund the acquisition)</li>
 	<li>Tariff disclosure observations</li>
 	<li>Income tax disclosure observations</li>
</ul>
</td>
</tr>
</tbody>
</table>
</td>
</tr>
<tr>
<td align="center" valign="top">
<table id="templateFooter" border="0" width="100%" cellspacing="0" cellpadding="0">
<tbody>
<tr>
<td class="footerContent" align="left" valign="top">
<div>The Center for Audit Quality is a nonpartisan public policy organization serving as the voice of U.S. public company auditors and matters related to audits of public companies. The CAQ promotes high quality performance by U.S. public company auditors; convenes capital market stakeholders to advance the discussion of critical issues affecting audit quality, U.S. public company reporting, and investor trust in the capital markets; and using independent research and analyses, champions policies and standards that bolster and support the effectiveness and responsiveness of U.S. public company auditors and audits to dynamic market conditions. Based in Washington, DC, the CAQ is affiliated with the American Institute of CPAs. For more information, visit <a href="https://www.thecaq.org/">www.thecaq.org</a>.

The CAQ Public Policy and Technical Alert (PPTA) is intended as general information and should not be relied upon as being definitive or all-inclusive. As with all other CAQ resources, this is not authoritative and readers are urged to refer to relevant rules and standards. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The CAQ makes no representations, warranties, or guarantees about, and assumes no responsibility for, the content or application of the material contained herein and expressly disclaims all liability for any damages arising out of the use of, reference to, or reliance on such material. This publication does not represent an official position of the CAQ, its board, or its members.

<em>Questions and comments about the Public Policy &amp; Technical Alert can be addressed to Donnie Heinerichs, Manager, Professional Practice (<a href="mailto:dheinerichs@thecaq.org">dheinerichs@thecaq.org</a>) or Annette Schumacher, Senior Director, Professional Practice (<a href="mailto:ashumacher@thecaq.org">ashumacher@thecaq.org</a>).  </em></div></td>
</tr>
</tbody>
</table>
</td>
</tr>
</tbody>
</table>
<table id="templateContainer" border="0" cellspacing="0" cellpadding="0"></table>
<table id="templateContainer" border="0" cellspacing="0" cellpadding="0">
<tbody>
<tr>
<td align="center" valign="top"></td>
</tr>
</tbody>
</table>

Public Policy and Technical Alert | August 2026

Newsletter

PPTA

The Center for Audit Quality (CAQ) submitted a comment letter in response to the Public Company Accounting Oversight Board’s (PCAOB) request for comment on its Draft 2026-2030 Strategic Plan Goals and Objectives.
The CAQ commends the PCAOB for developing a strategic...

<p style="line-height: 15.0pt;">The Center for Audit Quality (CAQ) submitted a comment letter in response to the Public Company Accounting Oversight Board’s (PCAOB) request for comment on its Draft 2026-2030 Strategic Plan Goals and Objectives.</p>
<p style="line-height: 15.0pt;">The CAQ commends the PCAOB for developing a strategic plan that reflects the evolving nature of the audit profession and capital markets. The CAQ supports the strategic plan and recommends that the Board focus on four key areas as it moves toward implementation: (1) the importance of organizational culture, professional development, and expertise; (2) emphasizing execution, prioritization, and coordination with the SEC; (3) continuing the evolution of inspections and inspections reporting; and (4) enhancing the role of the Office of the Chief Auditor in standard setting, implementation support, and interpretation.</p>
<p class="xmsonormal">Read the letter <a href="https://www.thecaq.org/wp-content/uploads/2026/09/caq_pcaob_strategic_plan_2026-2030_letter_9.4.26.signed.pdf">here</a>.</p>

Comment Letter to the PCAOB on Draft 2026-2030 Strategic Plan Goals and Objectives

Comment Letter

Welcome back, Audit Insiders! As the summer winds down, I’ve been reminded of the value of taking time to connect outside of our day-to-day work. The CAQ recently gathered for a staff outing to Nats Park, which provided a welcome...

<img class="wp-image-17321 aligncenter" src="https://www.thecaq.org/wp-content/uploads/2026/02/2026_Emails_Headers_Audit-Insider_V1.png" alt="" width="800" height="200" />

Welcome back, Audit Insiders! As the summer winds down, I’ve been reminded of the value of taking time to connect outside of our day-to-day work. The CAQ recently gathered for a staff outing to Nats Park, which provided a welcome opportunity to strengthen relationships and recharge before what promises to be an active fall season. With Labor Day approaching and year-end planning on the horizon, this edition highlights several developments shaping the profession.

To start, the PCAOB announced members of its new Inspections Modernization Council, put its draft five-year strategic plan out for comment, and closed the comment period on its first-ever request for input on its standard-setting and research agendas. At the SEC, the Division of Enforcement created a dedicated Financial Reporting and Accounting Unit. At the CAQ, my colleagues and I have been just as busy, filing our <a href="https://www.thecaq.org/comment-letter-to-the-sec-on-simplification-of-filer-status?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=AuditInsider">comment letter</a> on the SEC's filer status proposal, releasing the <a href="https://www.thecaq.org/audit-partner-pulse-survey?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=AuditInsider">Spring 2026 Audit Partner Pulse Survey</a>, and marking the anniversary of the Sarbanes-Oxley Act with reflections from leaders across our member firms.

Read on for what I'm tracking.

<img src="https://go.thecaq.org/l/834983/2026-01-21/3sy8vj/834983/1769009821CeObYtK5/2026_Emails_Headers_Audit_Insider_Whats_New_V1.png" alt="What's new in public company audit" width="600" height="100" border="0" />
<h2>The CAQ Comments on the SEC's Filer Status Proposal</h2>
On July 20, the CAQ submitted a <a href="https://www.thecaq.org/comment-letter-to-the-sec-on-simplification-of-filer-status?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=AuditInsider">comment letter on the SEC</a>’s proposal to enhance emerging growth company accommodations and simplify filer status for reporting companies. We support the Commission's objective of simplifying filer status definitions and reducing unnecessary regulatory cost, while expressing concern that the proposal’s exemptions from Section 404(b) auditor attestation may be too broad. In particular, the CAQ believes the proposed five-year exemption from Section 404(b) auditor attestation for newly public companies regardless of size is not appropriately tailored. The letter emphasizes that auditor attestation is an important investor protection and component of the capital markets ecosystem, and suggests the Commission’s objectives could be achieved through more targeted reforms that preserve important safeguards.
<h2>Comments Close on the PCAOB's Standard-Setting and Research Agendas</h2>
On June 23, the PCAOB issued a public <a href="https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-seeks-stakeholder-input-on-its-standard-setting-and-research-agendas">request for comment</a> on its standard-setting and research agendas, its overall approach to standard setting, and how the SEC's semiannual reporting proposal might affect PCAOB standards. This is the first time the Board has invited public input at this stage of the process. In our comment letter, the CAQ encouraged the PCAOB to develop a transparent conceptual framework to guide standard-setting priorities and processes, we supported adding data and technology, including digital assets, to the research agenda, and we supported projects related to fraud, NOCLAR, auditor independence, and going concern. Our letter also recommended against pursuing new standard-setting projects on critical audit matters (CAMs) or audit quality indicators, citing evidence that CAMs are meeting their intended objectives and concerns that firm and engagement metrics may be of limited value outside the context of audit committee discussions.

Comments were due August 7, and we’ll continue to monitor and update as appropriate.
<h2>PCAOB Announces Members of the Inspections Modernization Council</h2>
On July 9, the PCAOB <a href="https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-announces-members-of-the-inspections-modernization-council">named the 12 members</a> of its new Inspections Modernization Council (IMC), which will advise the Chairman, the Board, and staff on the inspection program and on emerging technologies relevant to oversight. The Council is organized around three focus areas: generating more meaningful inspection report outputs for the people who use them, leveraging automation and artificial intelligence, and centering inspections on firms' systems of quality control.

The PCAOB has also posted <a href="https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-posts-discussion-materials-from-summer-2026-meetings-of-the-inspections-modernization-council">discussion materials</a> from recent meetings of the IMC, which address topics including a quality control-informed inspection approach, technology use, inspection reporting, and remediation, offering insight into the PCAOB's ongoing efforts to evolve its inspection framework.
<h2>PCAOB Requests Comment on Its Draft 2026-2030 Strategic Plan</h2>
On July 20, the PCAOB <a href="https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-advances-strategic-planning-process-with-request-for-comment-on-draft-2026-2030-goals-and-objectives">issued a request for comment</a> on the six draft goals that will shape its 2026-2030 strategic plan, spanning standard setting, inspections and registration, enforcement, stakeholder engagement, technology and data, and organizational effectiveness. Several underlying objectives will be of particular interest to practitioners, including focusing inspections on firms' systems of quality control, improving inspection report clarity and timeliness, establishing a permanent broker-dealer auditor inspection program, and fostering alignment with international standards. Comments are due September 4.

We are preparing our response, and we encourage stakeholders across the profession to share their perspectives with the Board as well.
<h2>PCAOB Inspection Results Show Improvement Across Global Network Firms</h2>
The PCAOB recently <a href="https://pcaobus.org/oversight/inspections/firm-inspection-reports">released inspection reports</a> for the six U.S. global network firms, offering an early look at 2025 inspection results. Across the 312 audits reviewed, the average Part I.A deficiency rate improved to 13%, down from 26% in 2024, with all six firms reporting lower deficiency rates year over year. The reports also showed that restatements tied to inspected audits remained limited, with only one restatement identified across the firms reviewed. While additional inspection reports for other annually inspected firms are still forthcoming, the latest results suggest continued progress in firms' efforts to strengthen audit quality and address areas highlighted through the inspection process.
<h2>SEC Proposes New Regulation for Crypto Assets</h2>
The SEC has <a href="https://www.sec.gov/newsroom/press-releases/2026-76-sec-proposes-new-regulation-crypto-assets">proposed a new framework</a>, dubbed <em>Regulation Crypto Assets</em>, designed specifically for certain investment contracts involving crypto assets. The proposal would create tailored exemptions from Securities Act registration requirements while establishing disclosure, reporting, and investor protection requirements intended to support capital formation and innovation in digital asset markets.
<h2>Kyle Hauptman Sworn in as PCAOB Board Member</h2>
Kyle Hauptman was <a href="https://pcaobus.org/news-events/news-releases/news-release-detail/kyle-s.-hauptman-sworn-in-as-pcaob-board-member">sworn in as a member of the PCAOB Board on August 10</a>. Previously Chairman of the National Credit Union Administration, Hauptman brings experience in financial regulation and economic policy and has highlighted the growing role of technology in the audit profession as an area of focus. The CAQ looks forward to engaging with Board Member Hauptman as the PCAOB continues its work to support investors and audit quality.
<h2>PCAOB Releases New QC 1000 Implementation Resource</h2>
The PCAOB has published a new Q&amp;A resource to help firms prepare for implementation of QC 1000, A Firm's System of Quality Control. The guidance is the latest addition to the Board's growing library of implementation materials aimed at helping auditors understand and apply the new quality control standard before it takes effect.

Learn more <a href="https://pcaobus.org/news-events/news-releases/news-release-detail/pcaob-posts-new-resource-to-help-auditors-implement-quality-control-standard">here</a>.
<h2>The Audit Effect: The Role of the Auditor</h2>
<h3>How Independence Continues to Anchor Trust in the Capital Markets</h3>
July 30 marked 24 years since the <a href="https://www.thecaq.org/sox-the-landmark-legislation-that-strengthened-financial-reporting-and-audit-quality?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=AuditInsider">Sarbanes-Oxley Act</a> was signed into law, and much of what we now take for granted traces back to that statute: the creation of the PCAOB, strengthened auditor independence requirements, and an elevated oversight role for the audit committee. To mark the anniversary, the CAQ published <a href="https://www.thecaq.org/aia-how-independence-continues-to-anchor-trust-in-the-capital-markets?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=AuditInsider">How Independence Continues to Anchor Trust in the Capital Markets</a>, which looks at why those independence requirements remain a cornerstone of audit quality.

This piece arrives at a time when the profession is navigating rapid technological change, evolving business models, and increasingly complex stakeholder expectations. One of its central observations is that while the tools supporting audits continue to advance, the foundational principles that underpin financial reporting remain unchanged. As firms incorporate AI and other emerging technologies into their processes, independence continues to serve as a critical safeguard that helps ensure professional judgment remains objective and focused on the public interest. The framework established by SOX relies on auditors, audit committees, regulators, and company management, each playing a role in upholding confidence in the capital markets. Two decades after the law’s enactment, that shared commitment remains an important factor in supporting high-quality audits and investor trust.
<h3>Independence as the Foundation for Trust in an Evolving Market</h3>
Laura McCracken, Audit and Assurance Partner and Regulatory Leader at Deloitte, expanded on these themes in a guest <a href="https://www.thecaq.org/aia-independence-as-the-foundation-for-trust-in-an-evolving-market?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=AuditInsider">Audit in Action blog</a>. Laura spotlights why independence sits at the center of the system of standards, oversight, and independent assurance that the capital markets rely on, and makes a point on technology that I expect to hear a great deal more of this year: "technology elevates the audit; it does not replace the need for independence, objectivity, and professional judgment."

Earlier in the month, we also published <a href="https://www.thecaq.org/aia-how-auditor-expertise-strengthens-us-capital-markets?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=AuditInsider">How Auditor Expertise Strengthens U.S. Capital Markets</a>, featuring Andrea Castle, Audit Partner at Crowe, and Deanna Byrne, US Assurance Leader at PwC. I encourage you to read both and share them with your network.
<h2>Fighting Fraud</h2>
<h3>A Look Back at the 37th Annual ACFE Global Fraud Conference</h3>
The <a href="https://www.acfe.com/about-the-acfe/newsroom-for-media/press-releases/press-release-detail?s=37th-annual-acfe-global-fraud-conference-recap-pr">37th Annual ACFE Global Fraud Conference</a> took place July 12-17 in Boston, bringing together thousands of anti-fraud professionals and more than 130 speakers. Dr. Hany Farid, Professor at UC Berkeley and co-founder and Chief Science Officer of GetReal Security, spoke on navigating the age of artificial intelligence, a session that felt especially relevant given how quickly deepfake-enabled schemes are evolving.

For a recap of the conference and its takeaways, take a look <a href="https://antifraudcollaboration.org/fraud-risk-considerations-in-2026/">here</a>.
<h3>SEC Creates New Financial Reporting and Accounting Unit</h3>
The SEC <a href="https://www.sec.gov/newsroom/press-releases/2026-72-sec-establishes-financial-reporting-accounting-unit-enforcement-division">announced</a> the creation of a new Financial Reporting and Accounting Unit (FRAU) within its Division of Enforcement. The unit brings together attorneys and accountants with specialized expertise in financial reporting, accounting, and auditing to support the SEC’s efforts to investigate and pursue financial reporting fraud, accounting violations, and auditor misconduct. According to the SEC, the new unit is intended to strengthen the agency’s ability to identify and address misconduct involving public company financial reporting and audit-related matters. The move consolidates technical accounting and auditing expertise within Enforcement and reflects the SEC's continued emphasis on protecting investors through rigorous oversight of financial reporting.

<img src="https://go.thecaq.org/l/834983/2026-01-21/3sy8t4/834983/1769009327mRO1QBVq/2026_Emails_Headers_Audit_Insider_From_CAQ_V1.png" alt="From the CAQ" width="600" height="100" border="0" />
<h3>Spring 2026 Audit Partner Pulse Survey</h3>
On July 15, we released the <a href="https://www.thecaq.org/audit-partner-pulse-survey?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=AuditInsider">Spring 2026 Audit Partner Pulse Survey</a>, and it sheds light on the top trends shaping the current business landscape. As Amy O'Connor, our Vice President of Public Affairs, put it, this edition "highlights a shift from holding steady to moving forward with greater intent, even as uncertainty remains."

For the first time since the survey began in 2022, AI and data analytics ranked as top strategic priorities for audit partners' largest clients. However, nearly 90% of partners described their largest client's AI governance as developing or early stage, with only 6% calling it advanced. AI governance also topped the list of audit committee challenges at 57%, ahead of cybersecurity at 51%.

Amy expanded on the findings in her blog, <a href="https://www.thecaq.org/aia-three-trends-shaping-business-strategy-in-2026-insights-from-audit-partners?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=AuditInsider">Three Trends Shaping Business Strategy in 2026</a>, and my colleague Vanessa Teitelbaum, our Senior Director of Professional Practice, translated them for a board audience in <a href="https://boardmember.com/what-audit-partners-are-seeing-on-ai-and-what-it-means-for-audit-committees/">Corporate Board Member</a>. Take a look, and I’d love to hear what you think.
<h3>Audit Insider Webinar with SEC Leadership</h3>
On July 13, I had the pleasure of joining a conversation with Kurt Hohl, Chief Accountant at the SEC, and Heather Rosenberger, Chief Accountant in the SEC's Division of Corporation Finance, alongside my colleague Annette Schumacher, Senior Director of Professional Practice. In our meeting, we covered the regulatory reporting issues facing public companies and their auditors right now, current SEC initiatives, and recent proposals.

If you were not able to join us live, the <a href="https://www.youtube.com/watch?v=wdSeBKPeLzA">recording is available</a>, and I shared my top five takeaways <a href="https://www.thecaq.org/aia-conversation-with-sec-leaders-5-takeaways?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=AuditInsider">here</a>. Many thanks to Kurt and Heather for their time and candor, and we look forward to continued collaboration.

<img src="https://go.thecaq.org/l/834983/2026-01-21/3sy8t7/834983/17690093281cWv1fn4/2026_Emails_Headers_Audit_Insider_Insider_V1.png" alt="This month's Audit Insider" width="600" height="100" border="0" />
<div>

In our latest Audit in Action blog, Troy Merkel, Assurance Digital Leader at RSM explores how AI is moving from concept to practical application across the audit profession.

He highlights three tools recently integrated into RSM’s digital audit ecosystem: Ask Luca, a generative AI assistant that helps auditors access firm-approved guidance more efficiently; Microsoft M365 Copilot, which supports routine tasks such as summarizing information and drafting communications; and RSM Luca Resourcing, a workforce planning tool that uses technology to better align talent and engagement needs. While the applications differ, each is designed to reduce administrative burden and allow auditors to spend more time applying professional judgment, skepticism, and risk-focused analysis.

Merkel positions technology as a force multiplier that can improve consistency, efficiency, and execution quality, while reinforcing that human oversight remains central to maintaining trust in the audit process. Explore more of his insights in the <a href="https://www.thecaq.org/aia-shaping-the-future-of-assurance-advancing-ai-in-the-audit?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=AuditInsider">full blog</a>.

</div>
<div>
<h2><img src="https://go.thecaq.org/l/834983/2026-01-21/3sy8t1/834983/1769009327191ZcUyR/2026_Emails_Headers_Audit_Insider_Additional_V1.png" alt="Additional Resources &amp; Events" width="600" height="100" border="0" /></h2>
<div>
<h3>Registration Open: AICPA Conference on Current SEC and PCAOB Developments</h3>
<a href="https://www.aicpa-cima.com/cpe-learning/conference/aicpa-conference-on-current-sec-and-pcaob-developments">Registration is now open</a> for the AICPA &amp; CIMA Conference on Current SEC and PCAOB Developments, taking place December 7-9 in Washington, D.C., and online. The conference brings together SEC, PCAOB, and FASB leaders, along with audit and financial reporting professionals, to discuss the latest accounting, auditing, and regulatory developments shaping the profession. Attendees will gain insights directly from regulators and standard setters while exploring what may be on the horizon for public company reporting and auditing.

</div>
</div>
<table id="templateBody" border="0" width="100%" cellspacing="0" cellpadding="0">
<tbody>
<tr>
<td class="bodyContent" align="left" valign="top">
<div style="text-align: center;">

<strong>—</strong>
<h3><em>Dennis McGowan</em></h3>
<em>Vice President, Professional Practice and Anti-Fraud Initiatives</em>

<strong>​​​​​​
—</strong>

</div></td>
</tr>
</tbody>
</table>

The Center for Audit Quality

Annual Institutional Investor Survey

Webinar

Audit Insider Webinar | July 2026

Spring 2026

Audit Committee Practices Report

Common Threads Across Audit Committees

5th Edition

Audit Quality

Independence

Corporate Reporting Trends

Anti-Fraud

ESG

Future Talent

Corporate Reporting Trends

Trending Resources

Stay Connected.