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

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

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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. 

Hosted by Julie Bell Lindsay, CEO of the Center for Audit Quality, Capital Markets Pulse dives into the latest key matters related to the capital markets featuring experts from across the corporate reporting world.

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Hosted by Julie Bell Lindsay, CEO of the Center for Audit Quality, Capital Markets Pulse dives into the latest key matters related to the capital markets featuring experts from across the corporate reporting world.

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Podcast | Capital Markets Pulse, Episode 11: Mike Scanlon

Auditors

Policymakers

Investors

Audit Quality

Blog Post

Podcast

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Ken Bouyer and Diana Kutz

Ernst & Young LLP  

Against the black and gold backdrop of the Pittsburgh Steelers, some inspiring conversations are taking shape.

The Steelers Showcase, powered by Accounting+, is a series of events helping to educate curious high school students about accounting careers and the broader scope...

Against the black and gold backdrop of the Pittsburgh Steelers, some inspiring conversations are taking shape.

The Steelers Showcase, powered by Accounting+, is a series of events helping to educate curious high school students about accounting careers and the broader scope of the profession. From Acrisure Stadium to the UPMC Rooney Sports Complex, the Steelers practice facility, participants from Ernst &amp; Young LLP (EY US) and other Big Four firms team up with members of the Pittsburgh accounting community to explain what it is like to be an accountant and answer students' questions about career experiences.

More than just bean counters and number crunchers, accountants draw parallels between their daily endeavors and the high-stakes, game-time decisions made by football players. Because accounting, much like football, is a dynamic field centered around strategic problem solving and innovation. It’s about navigating complex scenarios and finding solutions, just without the imminent threat of a linebacker waiting, poised for a tackle. And by connecting with high school students around America’s sport, EY, the Center for Audit Quality (CAQ) and the rest of the profession are making accounting tangible and accessible, hoping to usher in a new generation of future CPAs.

[custom_quote text="Accounting, much like football, is a dynamic field centered around strategic problem solving and innovation."]

<img class="alignnone wp-image-15720 size-full" src="https://www.thecaq.org/wp-content/uploads/2024/12/2024_12_AiA_EY-Steelers-1.png" alt="" width="800" height="500" />
<h3><strong>Where are all the accountants?</strong></h3>
The accounting profession is facing a critical challenge. Demand for accountants remains robust, but the number of students sitting for the CPA exam is simply not keeping pace. The need for accounting graduates remains strong while the pipeline contracts.<sup>1</sup> In fact, the number of new CPA candidates declined by more than 35% between 2016 and 2022.<sup>2</sup>

One challenge in attracting students to the profession is the added time and cost associated with CPA licensure. In its report, <em>Increasing Diversity in the Accounting Profession Pipeline: Challenges and Opportunities</em>, the Center for Audit Quality (CAQ) found that 52% of non-accounting students point to the 150-hour CPA requirement as a financial barrier to considering a career in accounting, with even higher levels of concern among Black (62%) and Hispanic (69%) students.

While the challenge is not new, the way EY US and other firms are taking action to have a lasting impact on the future of the profession is.

[custom_quote text="One challenge in attracting students to the profession is the added time and cost associated with CPA licensure."]
<h3><strong>A bold investment </strong></h3>
In June, EY US took a bold step that we hope will be a catalyst for broadscale change. The firm announced a $1 billion, three-year investment in compensation and technology. To attract and retain the next generation of accounting talent, firms need to offer salaries that are competitive with those offered to other business majors — especially when they are required to invest in additional education to become a CPA. Our intent is to help “move the market” for accounting professionals, so that salaries reflect the value CPAs bring to the companies we serve and to the capital markets.

There is no denying that pay is a powerful motivator; however, our investment in the future of accounting is much broader. To attract and retain diverse talent to accounting, we are helping students see themselves in the profession. We also are creating the early career experiences that give them a platform to build a career that is uniquely suited to their interests and passions.

[custom_quote text="There is no denying that pay is a powerful motivator; however, our investment in the future of accounting is much broader."]
<h3><strong>Accessible and affordable career pathways </strong></h3>
Our latest investment builds on the EY Career Path Accelerator — a program that provides an alternative pathway to CPA licensure, <strong>making the profession more affordable and accessible</strong>. Since 2021, the EY Career Path Accelerator has helped EY US interns interested in pursuing accounting undergraduate majors who need a more accessible and affordable path to becoming CPA-eligible. Through a series of virtual courses offered by Hult International Business School and hands-on learning during their internships, participants learn future-focused skills and gain subject-matter knowledge they will need to eventually pursue licensure. The EY Career Path Accelerator has assisted 845 interns since inception, with the Ernst &amp; Young Foundation awarding over $820,000 in financial aid.
<h3><strong>A shared responsibility </strong></h3>
As ambassadors for the accounting profession, it is our shared responsibility to engage with students — sparking their interest in the world of accounting. Each of us can ask the insightful questions that unlock that opportunity for the next generation of accounting professionals. By showcasing the dynamic and impactful nature of accounting and providing accessible pathways into the profession, we can open their eyes to the diverse opportunities that accounting offers and secure a thriving future for the industry.

<em>The views reflected in this article are the views of the author and do not necessarily reflect the views of Ernst &amp; Young LLP or other members of the global EY organization.</em>

&nbsp;

<hr />

<h3><strong>EY people connect purpose with accounting – watch their stories</strong></h3>
<p class="whitespace-pre-wrap" style="margin: 15.0pt 0in 15.0pt 0in;"><a href="https://www.ey.com/en_us/careers/your-career-in-accounting">Accounting careers at EY | EY - US</a></p>
<a href="https://www.ey.com/en_us/careers/your-career-in-accounting"><img class="alignnone wp-image-15718 " src="https://www.thecaq.org/wp-content/uploads/2024/12/2024_12_AiA_EY-Steelers-Sidebar.png" alt="" width="500" height="386" /></a>

<hr />

<h4><em><strong>About the authors</strong></em></h4>
Ken Bouyer is the EY Americas Director of Inclusiveness Recruiting, responsible for driving the EY Americas diversity recruitment strategy. Ken is involved with several professional organizations, including NABA and ALPFA, and has been recognized with awards for his work in promoting diversity in accounting. He holds a bachelor’s degree in Accounting from Manhattan College and is a Certified Internal Auditor. Ken lives in New Jersey with his family.

Diana Kutz is the EY Americas Assurance Talent Leader, with over 20 years’ human resources experience operating as a strategic partner enabling business goals, driving talent management and fostering a positive culture, and a visionary for innovative talent solutions. Diana sits on the Conference Board with select senior executives committed to advancing work at the intersection of business performance and societal advancement and has been recognized by the Association for Talent Development (ATD) for elevating the employee experience.

&nbsp;

<hr />

<strong>Endnotes</strong>
<h6>1. “Accountants and Auditors,” <em>Occupational Outlook Handbook</em>, Bureau of Labor Statistics, U.S. Department of Labor,
<a href="https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm">https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm</a>.</h6>
<h6>2. Ibid., p. 17.</h6>

Building a more diverse CPA pipeline

Hosted by Julie Bell Lindsay, CEO of the Center for Audit Quality, Capital Markets Pulse dives into the latest key matters related to the capital markets featuring experts from across the corporate reporting world.

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Podcast | Capital Markets Pulse, Episode 10: Sam Ross

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Thomas Makenzie

KPMG US and Global Audit Chief Technology Officer 

AI and GenAI are transforming the landscape of financial reporting, driving innovation and improvements in quality and efficiency. In the next three years, 100% of US financial reporting leaders report they will be either piloting or using AI in financial...

AI and GenAI are transforming the landscape of financial reporting, driving innovation and improvements in quality and efficiency. In the next three years, 100% of US financial reporting leaders report they will be either piloting or using AI in financial reporting, according to a recent KPMG <a href="https://kpmg.com/us/en/media/news/ai-in-financial-reporting-kpmg-2024.html">survey on AI in financial reporting</a>.

As companies engage more with AI and GenAI capabilities in this 'AI era,' they will face new opportunities, risks and challenges. Financial reporting leaders are focused on navigating these risks by becoming AI-ready and expect their external auditor to not only use AI and GenAI in the audit, but also use professional judgement to evaluate control environments.

In fact, 83% of financial reporting leaders believe it is important for auditors to utilize AI in performing their analysis, prioritizing risk and anomaly identification, data analysis and quality management, and risk mitigation and real-time auditing.
<h3><strong>Enhancing audit quality with AI </strong></h3>
At KPMG, we are accelerating our use of AI in the audit, anchored by our Trusted AI framework, to continue enhancing quality and uncovering deeper insights for audit committees and management.

Last year, we deployed KPMG Audit Chat, our proprietary GenAI tool built on Azure OpenAI service, which includes a library of use cases. Audit Chat now <a href="https://kpmg.com/us/en/media/news/kpmg-audit-chat-new-capabilities-2024.html">helps auditors consult our methodology and the standards, review documentation and more</a>.

Today, we’ve <a href="https://kpmg.com/us/en/media/news/kpmg-ai-integration-clara-2024.html">embedded our GenAI assistant directly into KPMG Clara</a>, our global smart audit platform, for 90,000 auditors around the globe. Like an additional team member, this capability can interact directly with audit engagement documentation and our audit methodology to help auditors refine risk assessments, develop substantive testing procedures and enhance audit documentation.

Additionally, we are using directed AI and machine learning to conduct transaction scoring through our global alliance with MindBridge. With KPMG Clara Transaction Scoring, our teams are able to perform analyses over 100% of transactional populations, delivering audit evidence and identifying outliers over both general ledger and subledger populations. Transaction Scoring also enables our teams to refine risk assessments and unlock deeper, data-driven insights for audit committees and management teams.

AI is freeing up resources for our auditors to spend more time on the areas of highest risk, sector-specific risks and challenges – to the benefit of both stakeholders and the capital markets.

[custom_quote text="AI is freeing up resources for our auditors to spend more time on the areas of highest risk, sector-specific risks and challenges."]
<h3><strong>Protecting the capital markets with trust</strong></h3>
Our focus areas align with the demands of audit committees and management teams. Our research finds that companies across the US are eager to realize the benefits of an AI-enabled financial reporting process.

Among financial reporting leaders, the top expected benefits of AI in the next three years include real-time insights into risks, fraud and control weaknesses (73%), increased data accuracy and reliability (67%) and lower costs (62%). In addition, 60% expect greater ability to predict trends and impacts.

Importantly, our Trusted AI approach ensures we are deploying AI in the audit with a human-in-the-loop mindset to maintain quality and accuracy. Our teams are trained on how to effectively use AI as an enabler, ensuring our professionals are critically engaging outputs and exercising professional skepticism.
<h3><strong>Empowering our professionals with AI </strong></h3>
AI will augment, not replace, the role of the auditor, and the audit will always be people-driven. Our methodology, audit standards, industry dynamics and a business’s particular risks are integrated through human judgment and decision.

We believe AI will pull more people into the profession. By reducing manual work, people are free to focus on more strategic, higher-level thinking. Moreover, as the role of the auditor expands to protect the capital markets, the mission and purpose that drives our profession today will only increase.

[custom_quote text="AI will augment, not replace, the role of the auditor, and the audit will always be people-driven."]
<h3><strong>Looking ahead </strong></h3>
The use of AI and GenAI is becoming ubiquitous, with 58% of financial reporting leaders seeing GenAI as the number one technology priority in the next year.

At KPMG, where we are today is just the tip of the iceberg. As our technology teams and auditors gain more experience with GenAI, we expect to accelerate innovation across our audits.

More broadly, the benefits of AI will only grow as firms continue investing in and deploying new capabilities, and in the future, these trends will fundamentally shape the competitive positioning of finance functions in business strategy. At the same time, auditors will have the opportunity to become consistent collaborators with organizations as they embrace AI as a business enabler and navigate the increasingly dynamic, digitally connected market.

Transforming the audit experience with AI

Emerging Reporting Areas

Vice President, Professional Practice and Anti-Fraud Initiatives

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

In light of ongoing discussions around the critical audit matters (CAMs) communicated in PCAOB audit reports, the CAQ sought to better understand investors' understanding and use of CAMs. The results, institutional investors surveyed regularly use CAMs in their decision-making processes.
The...

In light of ongoing discussions around the critical audit matters (CAMs) communicated in PCAOB audit reports, <a href="http://thecaq.org/critical-audit-matters-survey-research-findings-q3-survey">the CAQ sought to better understand</a> investors' understanding and use of CAMs. The results, institutional investors surveyed regularly use CAMs in their decision-making processes.
<h3><strong>The Big Picture:</strong> <strong>What Are Critical Audit Matters (CAMs)?</strong></h3>
Taking a step back, CAMs are by definition any matter arising from the audit of the financial statements that was communicated or required to be communicated to the audit committee. The matter must also be one that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex auditor judgment. CAMs enable auditors to communicate in their auditor’s report those matters that were especially challenging, subjective, or complex during the audit of a company’s financial statements.

Communicating CAMs in the auditor’s report enables auditors to communicate directly with the user of the report, and can bridge the information gap between auditors and investors, providing investors with more information about the audit, likely in areas that would be of particular interest to them.

[custom_quote text="CAMs enable auditors to communicate in their auditor’s report those matters that were especially challenging, subjective, or complex during the audit of a company’s financial statements."]
<h3><strong>Zooming In: Investors’ Use of CAMs:</strong></h3>
After five years of auditor reporting that includes CAMs, there is some debate over the success of the new model, but <a href="https://www.thecaq.org/critical-audit-matters-survey-research-findings-q3-survey">recent CAQ research</a> appears to indicate that some benefits have been achieved.

Our survey found that investor respondents had strong positive feedback regarding CAMs.
<ul>
 	<li>Nearly all (93%) investors surveyed indicated that they read the CAMs section in 10-Ks of companies they invest in or are researching, and 78% indicated that they do so often.</li>
 	<li>92% of respondents indicated that they use CAMs in their investment decision-making process</li>
 	<li>93% said that, considering all the sources of information available to them, CAMs play a very important (53%) or somewhat important (40%) role in their analysis of potential investments.</li>
 	<li>Additionally, nine in ten investors stated that they are very satisfied (48%) or somewhat satisfied (42%) with the quality and clarity of CAMs disclosed in most audit reports, with only 2% of respondents expressing dissatisfaction.</li>
</ul>
Of the small number that expressed dissatisfaction with the quality and clarity of CAMs, they indicated that the language used to describe CAMs is not clear or overly complicated.

While satisfaction levels were high according to the survey, investor respondents did have some suggestions for ways in which CAMs could be improved.

More than half (58%) of investors surveyed indicated that they prefer to see more CAMs identified in an auditor’s report; and when asked what changes to CAMs would benefit their investment decisions, approximately half of respondents shared that both increasing the number of CAMs (52%) and increasing the detail provided in CAMs (51%) would be beneficial. Twenty-five percent of respondents also felt that requiring CAMs related to specific audit areas would be advantageous, but there was no consensus regarding the specific areas in which required subject matter specific CAMs were desired.

When asked to rank which information related to CAMs respondents do or would find most important to their investment decisions, the most selected responses were the inherent risk associated with the CAM (50% of respondents ranked as 1 or 2) and the topic/area of the CAM (46% of respondents ranked as 1 or 2). This feedback was interesting, as the topic area of the CAM is something that is currently required to be disclosed, but the inherent risk associated with the CAM is not required and is not frequently included in auditor’s reports today.

The results of our survey suggest that CAMs are understood and provide value to investors. As one investor wrote, “I find audit transparency critical to assessing a company’s financial health. CAMs can reveal the most complex or judgmental areas of an audit, which helps me identify potential risk points.”

While CAMs will continue to evolve to meet investors’ information needs, it is gratifying to see evidence that the efforts of standard setters and auditors to increase transparency around the audit process with the communication of CAMs is benefiting the capital markets.

[custom_quote text="I find audit transparency critical to assessing a company’s financial health. CAMs can reveal the most complex or judgmental areas of an audit, which helps me identify potential risk points."]
<h3></h3>

Unveiling the Value of Critical Audit Matters (CAMs) for Investors

Audit Committee Effectiveness: A Webinar Series | Episode 7
Welcome to Audit Committee Effectiveness: a webinar series brought to you by the Center for Audit Quality and the National Association of Corporate Directors. The series explores key takeaways and insights from...

<h4>Audit Committee Effectiveness: A Webinar Series | Episode 7</h4>
<em>Welcome to Audit Committee Effectiveness: a webinar series 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. Stay tuned to this page for information about topics, participants, and how to register for upcoming webinars.</em>

<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" />

In our initial AI 101 for Audit Committees <a href="https://www.thecaq.org/artificial-intelligence-ai-101-for-audit-committees">webinar</a>, we tackled how recent advancements, powered by the likes of OpenAI’s ChatGPT and Google’s Gemini, has captured the attention of corporate leaders around the world.  Corporate boards are focusing on better understanding the technology and establishing guardrails to ensure risks of information security, data quality, hallucinations, and other areas are appropriately managed.

Now, in the second of a 2-part series, speakers <a href="https://www.ey.com/en_us/people/richard-jackson">Richard Jackson</a> (Global Artificial Intelligence Assurance Leader, EY) and <a href="https://www.linkedin.com/in/hrncirik/">Cory Hrncirik</a> (Modern Finance Lead, Microsoft) join us again with <a href="https://www.nacdonline.org/philadelphia/philadelphia-leadership/tom-petro/">Tom Petro</a> (Managing Partner, Capital Partners &amp; Audit Committee Member) to discuss how things have evolved in just the past 8 months.

We’ll discuss the evolving role of the audit committee, including oversight of both management and the external auditor. We’ll dive into such questions as:
<ul>
 	<li>Does the company have the requisite expertise to select, develop, deploy, and monitor genAI technologies?</li>
 	<li>Who (individual or group) in the company is responsible for oversight of the use of genAI?</li>
 	<li>Does the company have a process to track and monitor the use of genAI throughout the company, including use by third-party service providers?</li>
 	<li>What is the auditor’s understanding of the financial reporting implications of the company’s use of genAI technologies?</li>
 	<li>Does the company’s use of genAI technologies have a significant impact on the planned audit scope?</li>
 	<li>Has the auditor identified any fraud risks related to the company’s use of genAI technologies? How has the auditor addressed such risks in the audit?</li>
</ul>
<strong><em>Note</em></strong><em>: CPE available only to participants who joined the live webcast. </em>

<em>See the CAQ’s resources for more information: <a href="https://www.thecaq.org/wp-content/uploads/2024/04/caq_auditing-in-the-age-of-generative-ai__2024-04.pdf">Auditing in the Age of Generative AI</a> and  <a href="https://www.thecaq.org/ac-oversight-in-the-age-of-genai">Audit Committee Oversight in the Age of Generative AI</a>.</em>

Artificial Intelligence (AI) 101 For Audit Committees - Part II

Audit Committee

Webinar

Event

This hour-long webcast will showcase emerging issues facing public companies and their auditors. It will feature Christine Gunia, Director of the PCAOB’s Division of Registration and Inspections, and representatives from the public company auditing profession. Panelists will discuss PCAOB inspection...

This hour-long webcast will showcase emerging issues facing public companies and their auditors. It will feature Christine Gunia, Director of the PCAOB’s Division of Registration and Inspections, and representatives from the public company auditing profession. Panelists will discuss PCAOB inspection findings and areas of focus as well as audit firm best practices.

<em><strong>Note</strong>: CPE available only to participants who joined the live webcast.</em>

Audit Insider Webinar | October 2024

Audit Committee Effectiveness: A Webinar Series | Episode 6
Welcome to Audit Committee Effectiveness: a webinar series brought to you by the Center for Audit Quality and the National Association of Corporate Directors. The series explores key takeaways and insights from...

<h4>Audit Committee Effectiveness: A Webinar Series | Episode 6</h4>
<em>Welcome to Audit Committee Effectiveness: a webinar series 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. Stay tuned to this page for information about topics, participants, and how to register for upcoming webinars.</em>

<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" />

Enterprise Risk Management (ERM) is essential for audit committee members, offering insights into identifying, assessing, and mitigating risks that impact organizational objectives. Join the CAQ, NACD and our panel of experts for a discussion on how audit committees can fulfill their oversight responsibilities related to ERM through the lens of frameworks, regulatory expectations, and best practices for effective risk oversight. Participants will learn how to enhance risk reporting, improve decision-making, and ensure alignment with strategic goals.

<em><strong>Note</strong>: CPE available only to participants who joined the live webcast.</em>

Enterprise Risk Management for Audit Committees

This hour-long webcast will showcase regulatory and practice developments of interest to public companies and their auditors. Panelists include staff from the SEC’s Division of Corporation Finance and the SEC’s Office of the Advocate for Small Business Capital Formation. Panelists...

This hour-long webcast will showcase regulatory and practice developments of interest to public companies and their auditors. Panelists include staff from the SEC’s Division of Corporation Finance and the SEC’s Office of the Advocate for Small Business Capital Formation. Panelists will discuss comments issued on SEC filings and lessons learned from the 2023 reporting cycle. Panelists will also discuss the role of the Office of the Advocate for Small Business Capital Formation, including the resources they offer small businesses and the firms that serve them.

<em><strong>Note</strong>: CPE available only to participants who joined the live webcast.</em>

Audit Insider Webinar | July 2024

Audit Committee Effectiveness: A Webinar Series | Episode 5
Welcome to Audit Committee Effectiveness: a webinar series brought to you by the Center for Audit Quality and the National Association of Corporate Directors. The series explores key takeaways and insights from...

<h4>Audit Committee Effectiveness: A Webinar Series | Episode 5</h4>
<em>Welcome to Audit Committee Effectiveness: a webinar series 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. Stay tuned to this page for information about topics, participants, and how to register for upcoming webinars.</em>

<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" />

Join us for a discussion about the <a href="https://www.thecaq.org/audit-committee-practices-report-2024">third edition of the Audit Committee Practices Report</a>, a collaboration between Deloitte’s Center for Board Effectiveness and the Center for Audit Quality. Based on survey findings, this webinar offers audit committee members and those who work with them an opportunity to hear about committee priorities, challenges, and opportunities, as well as leading practices around audit committee effectiveness.

<em><strong>Note</strong>: CPE available only to participants who joined the live webcast.</em>

2024 Audit Committee Practices Report Webinar

Washington, DC (November 18, 2024) – Today, the Center for Audit Quality (CAQ) and Ideagen Audit Analytics – an Ideagen Solution, released the 11th iteration of the annual Audit Committee Transparency Barometer Report. The report, which has been conducted annually...

<strong>Washington, DC (November 18, 2024) – </strong>Today, the Center for Audit Quality (CAQ) and Ideagen Audit Analytics – an Ideagen Solution, released the 11th iteration of the annual Audit Committee Transparency Barometer Report. The report, which has been conducted annually since 2014, analyzes audit committee disclosures of companies in the S&amp;P 1500.

Given audit committees face emerging risks and new areas of oversight responsibility, investors are interested in understanding the board’s composition and expertise. This years’ Barometer shows that disclosures related to expanded disclosure areas – particularly around audit committee oversight of and expertise in cybersecurity and ESG – have increased. Tracked for the first time, this year’s report also found that most boards are disclosing a skills matrix.

“The Transparency Barometer continues to provide insights into the deliberations of audit committees and how they exercise their expanding responsibilities,” said Michael Nohrden Vice President of Strategy for Ideagen. “It serves as an important tool for boards and the public to track and compare audit committee disclosures in the S&amp;P 1500.”

However, the report identifies several disclosure areas that have plateaued. These results demonstrate a continued opportunity for audit committees to enhance their disclosures on key matters to effectively tell their story.

“We continue to hear from investors that they would like more information – not boilerplate disclosures – around audit committees’ important responsibilities and processes,” said Julie Bell Lindsay, CEO, CAQ. “While we are pleased to see that audit committees are increasingly disclosing information about new oversight areas and their expertise, we hope they will take a fresh look and consider further enhancing their disclosures to ‘tell their story’ and the important work they do.”

Some key toplines of the report include:
<ul>
 	<li>The majority of S&amp;P 500 companies (85%) and S&amp;P midcap companies (75%) disclosed the board of directors’ skills matrix.</li>
 	<li>64% of S&amp;P 500 boards disclosed the audit committee is responsible for cybersecurity oversight while 34% of S&amp;P 500 boards disclosed the audit committee is responsible for oversight of ESG information.</li>
 	<li>60% of S&amp;P 500 boards disclosed they have a cybersecurity expert compared with 51% in 2023. ESG or sustainability expertise on the boards of S&amp;P 500 companies also increased by five percentage points since 2023 to 59%.</li>
 	<li>A plateau in disclosure rates was observed across several measures, including considerations in appointing or (re) appointing the external auditor, considerations of the length of tenure, and considerations around how the audit committee evaluates audit fees in relation to audit quality.</li>
</ul>
The full report is available to read <a href="https://www.thecaq.org/audit-committee-transparency-barometer">HERE</a>.

###

<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.

<strong>About <u>Ideagen </u>Audit Analytics</strong><strong> – An Ideagen Solution</strong>

<u>Ideagen </u>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 <a href="mailto:info@auditanalytics.com">info@auditanalytics.com</a> or call 508-476-7007.

Annual Audit Committee Disclosure Barometer Finds Increase in Disclosure of Areas of Oversight and Expertise

Washington DC, October 30, 2024 – Going into 2025, a potential recession, ongoing inflation, and geopolitical instability are just some of the top concerns of audit partners and the companies they audit, according to the Center for Audit Quality’s (CAQ)...

<strong>Washington DC, October 30, 2024</strong> – Going into 2025, a potential recession, ongoing inflation, and geopolitical instability are just some of the top concerns of audit partners and the companies they audit, according to the Center for Audit Quality’s (CAQ) most recent Audit Partner Pulse survey. The Audit Partner survey provides independent and objective perspectives on a range of topics, including economic risks and business transformation.

“Public company auditors are in every public company, of every size, in every industry, in the U.S.,” said Julie Bell Lindsay, Chief Executive Officer, CAQ. “This breadth and depth provides public company audit partners with unique insights into how America’s businesses operate.”

Below are key findings from their observations.

<strong>Partners Neutral on the Economy Despite Perceived Risks </strong>
<ul>
 	<li>A potential recession is the largest economic risk factor audit partners foresee over the next 12 months, followed by regulations and geopolitical instability.</li>
 	<li>Despite the risks, audit partners' outlook for the U.S. economy over the next 12 months is trending neutral.</li>
 	<li>Auditors are less positive about inflation, with the majority believing it will continue to impact businesses in their primary industry sector for the next six to 12 months.</li>
</ul>
<strong>Businesses are Concerned for the U.S. Election </strong>
<ul>
 	<li>According to the audit partners, most businesses are concerned about the potential impact of the U.S. election on their financial performance over the next 12 months (65%).</li>
 	<li>Despite this, most public companies are not adjusting their business strategies and do not foresee direct disruptions to their business are a result of the election.</li>
</ul>
<strong>Labor Strategies Signal Mixed News for Workers </strong>
<ul>
 	<li>Audit partners report a significant shift in labor priorities, with labor shortages dropping down considerably among their list of economic risks.</li>
 	<li>According to the audit partners, upskilling employees is the top human capital action they are observing among companies in their industry sectors (66%).</li>
 	<li>However, this is closely followed by reducing headcount (59%) and decreasing workplace flexibility (51%).</li>
</ul>
<strong>Technology Shifts in AI and Cryptocurrency:  </strong>
<ul>
 	<li>The shift in labor strategies may be influenced by public companies' use of technology. According to the audit partners, process automation (62%), customer service (52%) and predictive analysis (34%) are all areas they see companies increasing their utilization of artificial intelligence (AI).</li>
 	<li>While the audit partners reported an increase in the use of AI, organizations appear to be losing interest in cryptocurrency, with most (83%) reporting that organizations in their industry sector have no exposure to it.</li>
</ul>
Download the report, <a href="http://www.thecaq.org/audit-partner-pulse-survey"><em>Fall 2024 CAQ Audit Partner Survey</em></a>, to access the full survey 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>
 	<li>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.</li>
</ul>
<strong>Contact:</strong>

Brad Jacklin

Director of Communications

Bjacklin@thecaq.org

(202) 494-9560

Audit Partners’ 2025 Economic Outlook Highlights Recession, U.S. Election Concerns

Press Releases

Company Management

Washington DC, September 26, 2024 – Kathleen Casey, Senior Advisor at Patomak Global Partners, a leading strategy, risk management, and compliance consultancy, joined the CAQ's Governing Board, effective September 26, 2024.

Casey brings decades of financial policy experience, previously serving as...

<strong>Washington DC, September 26, 2024</strong> – Kathleen Casey, Senior Advisor at Patomak Global Partners, a leading strategy, risk management, and compliance consultancy, joined the CAQ's Governing Board, effective September 26, 2024.

Casey brings decades of financial policy experience, previously serving as an SEC Commissioner from 2006 to 2011, where she acted as the SEC’s principal representative in multilateral and bilateral regulatory dialogues, the G-20 Financial Stability Board, and the International Organization of Securities Commissions (IOSCO). Casey focuses on financial markets policy, regulatory compliance and risk management, corporate governance, international regulatory developments, and enforcement in her current role.

“We’re pleased to welcome Kathy to the Board,” said Julie Bell Lindsay, Chief Executive Officer, CAQ. “Her financial policy expertise will be invaluable to the CAQ and the public company audit profession as we navigate new standards and regulations that are arising as a result of the evolving corporate reporting landscape.”

“I’m pleased to join CAQ’s Governing Board and support their important efforts to advance the CAQ’s public interest objectives of enhancing the quality, credibility and transparency of public company audits,” said Casey. “I look forward to working with the Board to address topics vital to audit quality and the future of the profession."

The CAQ’s Governing Board is comprised of a variety of leaders representing the financial reporting ecosystem, including chief executive officers from some of the largest public company audit firms, the American Institute of CPAs, as well as independent board members from stakeholder communities.

+++

<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.

<strong>Contact:</strong>
Brad Jacklin
Director of Communications
Bjacklin@thecaq.org
(202)-494-9560

Patomak Global Partners’ Kathleen Casey Joins CAQ Governing Board

Washington DC, June 17, 2024 – The CAQ Governing Board elected Brian Becker, Managing Partner and CEO, RSM US LLP (RSM), as the new Vice Chairman of the Governing Board, effective June 14, 2024.

Becker oversees the firm’s strategy and operations...

<strong>Washington DC</strong>, <strong>June 17, 2024</strong> – The CAQ Governing Board elected Brian Becker, Managing Partner and CEO, RSM US LLP (RSM), as the new Vice Chairman of the Governing Board, effective June 14, 2024.

Becker oversees the firm’s strategy and operations across four countries—the United States, Canada, El Salvador and India. Becker is driving RSM to become a digital firm and is committed to advancing the firm’s inclusive culture, as well as to continuing its longstanding history of stewardship.

“With his extensive experience and long-standing dedication to the profession, Brian will be essential to the CAQ as we work to instill trust in corporate reporting and the integrity of the auditing process,” said Julie Bell Lindsay, Chief Executive Officer, Center for Audit Quality.

“In this time of accelerating change for the auditing profession, the CAQ’s mission of enhancing trust and transparency is more important than ever,” said Becker. “I look forward to continuing to serve on the Board in the role of Vice Chair as we address the challenges and opportunities that lie ahead.”

Becker succeeds Wayne Berson, Chief Executive Officer, BDO USA and Chairman, BDO International. “I also want to extend our gratitude to Wayne for his time and energy as Vice Chair of our Governing Board since 2019. With his vision and leadership, Wayne has been an essential driver of our goals and commitment to strengthening the work of public company auditors,” said Lindsay.

The CAQ’s Governing Board is comprised of a variety of leaders representing the financial reporting ecosystem, including chief executive officers from some of the largest public company audit firms, the American Institute of CPAs, as well as independent board members from investor, board member and issuer communities.

<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.

<strong>Contact:</strong>
Brad Jacklin
Director of Communications
Bjacklin@thecaq.org
(202)-494-9560

RSM CEO Brian Becker Elected as New Vice Chair of CAQ Governing Board

Preparers/Issuers

Washington DC, April 2, 2024 – Paul Knopp, KPMG U.S. Chair and CEO, has been elected Chair of the CAQ’s Governing Board, effective April 1, 2024.

The CAQ’s Governing Board is comprised of a variety of leaders representing the financial reporting...

<strong>Washington DC, April 2, 2024 – </strong>Paul Knopp, KPMG U.S. Chair and CEO, has been elected Chair of the CAQ’s Governing Board, effective April 1, 2024.

The CAQ’s Governing Board is comprised of a variety of leaders representing the financial reporting ecosystem, including chief executive officers from some of the largest public company audit firms, the American Institute of CPAs, as well as independent board members from investor, board member and issuer communities. The Governing Board oversees the CAQ’s strategic agenda and activities.

“The financial reporting landscape is constantly evolving, creating new challenges and opportunities for the public company audit profession,” said Julie Bell Lindsay, Chief Executive Officer, CAQ. “With his extensive experience serving large, multinational clients as an audit partner and his leadership and long-standing dedication to the profession as the Chair and CEO at KPMG,  Paul will be essential to the CAQ as we fulfill our mission of supporting high-quality financial reporting, convening capital market stakeholders to advance discussions on audit quality issues and championing policies and standards that bolster and support audits.”

“With rapidly emerging technologies such as generative AI, new corporate reporting areas including new climate disclosure rules and a need to strengthen the talent pipeline for the future, now is a transformative time for the public company audit profession,” said Knopp. “I look forward to supporting the CAQ in executing their strategic agenda and supporting the profession as it embraces the future of financial reporting while maintaining a laser focus on investor protection through high-quality audits.”

Knopp succeeds Tim Ryan, US Senior Partner at PwC. “Tim has been instrumental in leading the CAQ to help address some of the most important issues impacting our profession, from the talent pipeline to helping the profession lead the way in emerging areas of corporate reporting like climate and cybersecurity,” said Lindsay.

<strong>About the Center for Audit Quality</strong>

The Center for Audit Quality (CAQ) is a nonpartisan public policy organization serving as the voice of US public company auditors and matters related to the audits of public companies. The CAQ promotes high-quality performance by US public company auditors; convenes capital market stakeholders to advance the discussion of critical issues affecting audit quality, US 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 US public company auditors and audits to dynamic market conditions.

KPMG U.S. Chair and CEO Paul Knopp to Helm CAQ’s Governing Board

Welcome to another edition of Capital Markets Pulse, a monthly newsletter from the Center for Audit Quality that brings you insights, resources, and tools on the latest issues impacting the capital markets

It’s the season of giving, and while visions of...

<img class="aligncenter wp-image-13866" src="https://thecaq.wpenginepowered.com/wp-content/uploads/2023/06/Header_JBL_1200x400_600x200_FINAL_Website.png" alt="Capital Markets Pulse with Julie Bell Lindsay" width="650" height="163" />

<strong>Welcome to another edition of Capital Markets Pulse</strong>, a monthly newsletter from the Center for Audit Quality that brings you insights, resources, and tools on the latest issues impacting the capital markets

It’s the season of giving, and while visions of sugar plums, gifts, and cozy fires may be dancing in your head, I interrupt those festive thoughts with some important updates from the profession.

Last month, the PCAOB approved two significant rules – one on firm and engagement metrics and another on firm reporting – set to have widespread implications for public company audit firms. They also decided to table NOCLAR until the New Year, giving us something to watch for in 2025.

On our end, we released this year’s Audit Committee Barometer publication, which highlighted some encouraging trends, like increased audit committee disclosures on cybersecurity, alongside opportunities for further improvement. Meanwhile, this month’s Capital Markets Pulse podcast explored how recent Supreme Court cases could shape the public company audit profession—a timely discussion in the wake of election season.

As we embrace this season of giving, I’d like to take a moment to give thanks for my exceptional CAQ team, whose hard work supports the public company audit profession and strengthens the capital markets.

Read on for the latest updates and insights from the profession.

<em>Please note that these perspectives are my own. If this email was forwarded to you, <a href="https://go.thecaq.org/l/834983/2020-04-22/fskb">subscribe here</a> so that you never miss a public company auditing update. </em> ​​​

&nbsp;

<img class="wp-image-14496 aligncenter" src="https://www.thecaq.org/wp-content/uploads/2024/02/Header_JBL_1200x400_600x200_PODCAST_V2.png" alt="" width="600" height="150" />
<h3><strong>Implications of recent Supreme Court decisions with Mike Scanlon</strong></h3>
<img src="https://go.thecaq.org/l/834983/2021-08-13/v6qx3/834983/1628880917iuEMV3PL/Lindsay_Julie_Bell_4x5_color.jpg" alt="" width="150" height="188" border="0" /> <img src="https://go.thecaq.org/l/834983/2024-12-19/3p6v6c/834983/1734622601PCqkUkdp/scanlon_michael_square_2024_May_28.jpg" alt="" width="188" height="188" border="0" />

In the latest episode of Capital Markets Pulse, I met with Mike Scanlon, partner in the Washington, D.C. office of Gibson, Dunn &amp; Crutcher, to discuss the potential impact of recent Supreme Court cases on SEC and PCAOB rulemaking, standard-setting and enforcement applicable to the public company audit profession.

The following are a few highlights from our conversation:
<ul>
 	<li><strong>On Loper Bright:</strong> The decision is not all together surprising in that it reflects a trend in the recent past of the courts narrowing agency authority...In essence, when an agency action is challenged under the Administrative Procedure Act, that Act requires the court decide all relevant questions of law without deferring - and deferring is the key word - to an agency's interpretation.</li>
 	<li><strong>On the SEC vs. Jarkesy: </strong>This case really zeroes in on the scope of an agency's ability to bring an adjudicated enforcement action in an administrative law tribunal - so an in house agency court - before an administrative law judge as opposed to a federal court. As the administrative state has grown in the U.S. over the past century, the notion of having in house courts at a federal agency has become part and parcel of the administrative state. And this case zeroes in on to what extent a respondent or an agency who brings an enforcement action against a respondent in that in house court - to what extent that respondent is entitled to hear that case before a federal jury in federal court as opposed to an in house court which do not have juries.</li>
 	<li><strong>On the implications of these decisions for the SEC and PCAOB: </strong>There's two pieces to think about. One is generally the implications for agency rulemaking. And then what does it mean for the accounting profession. I think more broadly and certainly from a political perspective, the decision and the package of  decisions from the Supreme Court on the adlaw side this year, adds arrows to the quiver of the anti-regulatory camps and will be bantered about in that context on Capitol Hill and beyond. [From a litigation perspective] we have already seen more than 40 federal lawsuits that have been filed citing Loper Bright in the wake of the decision saying that the various regulations plaintiffs are challenging should be overturned, including some fairly notable cases, the FTC's noncompete ban and at the SEC for example, crypto firms have challenged the SEC's dealer rule on the same basis.[Loper Bright together with other tools] form a fairly significant package of administrative law basis to challenge rule-making.</li>
</ul>
Listen to the full podcast here: <a href="https://www.thecaq.org/podcast-capital-markets-pulse-episode-11">Implications of recent Supreme Court decisions feat. Mike Scanlon, Partner at Gibson, Dunn &amp; Crutche</a>

Be sure to subscribe to the latest episodes on <a href="https://open.spotify.com/show/0Eom56jIKUbXXufaJ98yBX">Spotify</a>, <a href="https://podcasts.apple.com/us/podcast/capital-markets-pulse/id1690673211">Apple Podcasts</a>, or <a href="https://music.amazon.com/podcasts/a9d37ab7-2e09-4ce9-93a5-bc0399d25fae/capital-markets-pulse">Amazon Music</a>.

<img class="aligncenter wp-image-13867" src="https://thecaq.wpenginepowered.com/wp-content/uploads/2023/06/Header_JBL_1200x400_600x200_RADAR-1024x256.png" alt="On my radar" width="600" height="150" />
<h2>Profession Updates</h2>
<h3><strong>Highlights from the Annual AICPA &amp; CIMA Conference </strong></h3>
Last week the CAQ was in full force at the AICPA &amp; CIMA’s annual conference focused on SEC and PCAOB developments. The event featured many important discussions focused on the future of the profession with regulators, board members, auditors, and other stakeholders. Below are highlights from two events the CAQ participated in:

<strong>Q&amp;A with SEC Commissioner Mark Uyeda:</strong> During this session, moderated by my colleague Dennis McGowan, Commissioner Uyeda discussed, among other things, his thoughts on overly theoretical regulatory methods and highlighted the importance of consulting practitioners before finalizing rules. On the PCAOB, Uyeda called for a comprehensive review to assess its effectiveness in meeting the objectives established by SOX. He suggested that all options should be considered regarding the PCAOB's future. Uyeda also expressed concerns about the implementation of Staff Accounting Bulletin 121 and called for a reassessment of financial materiality in disclosures.

<strong>PCAOB Panel: </strong>The CAQ also facilitated a panel with the PCAOB. Chair Williams opened the session with prepared remarks, including the PCAOB’s inspection process, noting that inspectors are “seeing significant improvements in the aggregate Part I.A deficiency rate from the largest firms.” She also focused on the PCAOB’s achievements during her tenure, including the modernization of several standards, saying, “When I was sworn-in as chair of the PCAOB, 54 standards were largely untouched from when they were originally written in the 1980’s and 90’s, and frankly, many were unresponsive to what investors need to participate confidently in the markets today.” On the shelved standard NOCLAR, she said “public feedback is absolutely vital to our work. We read each and every comment letter we receive, and by listening to and learning from this feedback, our expert staff are considering adjustments. Based on the staff’s evaluation of the feedback, we decided we need more time before moving this project forward.”

The panel also included audience Q&amp;A, where questions from the audience focused on the future of the PCAOB and some concerns with the recent standards. On the future of the Board, Chair member Ho said, “I do welcome a more moderate measure and moderate approach, so I am looking forward to working with the new SEC.”

<strong>Other events:</strong> Speaking of Board member Ho, she followed up on Chair Williams’ remarks on the PCAOB’s inspections with her own comments at the Investment Company Institute’s Accounting Treasurer’s Committee Meeting. She expressed concern about the PCAOB’s tone, saying, “With regard to inspections, the PCAOB seems to want to instill fear instead of confidence in our capital market system. Two days ago, the PCAOB Chair gave remarks in which she accurately stated that there has been in recent years an increase in Part I.A deficiencies identified by PCAOB inspectors. But she lost all sense of proportionality by engaging in fear mongering, when she stated that “Part I.A findings are serious,” and provided examples such as the auditor “failing to perform any procedures at all to test revenue . . . .” Her statement and stark examples seem designed to inspire fear about the state of public company audits, by suggesting that a PCAOB inspection report identifying even a single Part I.A deficiency is an ominous indicator of audit quality.”

During the same meeting, Board member Ho likened recent enforcement actions to “jay walking” tickets, stating, “The focus should be on violations that are most likely put investors at risk, rather than what I colloquially refer to as parking or jay walking violations… approximately 25% of the PCAOB’s enforcement orders consisted of parking or jay walking tickets; specifically, failures by firms to comply with PCAOB reporting requirements.”
<h3><strong>PCAOB Approves Rules on Firm Engagements Metrics and Firm Reporting; Postpones NOCLAR </strong></h3>
Last month, by a 4 to 1 vote (with Board Member Ho dissenting), the PCAOB voted to approve two of its rules, <em><a href="https://assets.pcaobus.org/pcaob-dev/docs/default-source/rulemaking/docket_041/2024-012-firm-and-engagement-metrics.pdf?sfvrsn=56352677_2">Firm and Engagement Metrics</a></em> and <em><a href="https://assets.pcaobus.org/pcaob-dev/docs/default-source/rulemaking/docket-055/2024-013-firm-reporting.pdf?sfvrsn=1e072ad1_2">Firm Reporting</a></em>. While the CAQ supports the Board’s efforts to modernize existing standards, we expressed concerns about the proposals.

On the firm and engagement metrics proposal, <a href="https://www.thecaq.org/comment-letter-pcaob-firm-and-engagement-metrics-proposal">we were concerned</a> that the metrics could be misinterpreted by investors, add to costs, and were not scalable for smaller firms. Further, a survey we conducted with audit committees and investors found that they wanted more evidence to support the need for and benefit of the proposed metrics. During the hearing, Board member Ho said, “The standard adopts burdensome metrics that have an unproven correlation with audit quality.”

On the firm reporting rule, the CAQ <a href="https://www.thecaq.org/comment-letter-pcaob-firm-reporting-proposal">expressed</a> a number of comments and concerns regarding the reporting requirements included in the proposal.  Specifically, we are concerned that this rule will provide limited and uncertain benefits to stakeholders while exposing registered firms to significant costs and risks.

The rules now have 45 days to be approved by the SEC (until January 17, 2025). It’s a busy holiday season, but if you have feedback, don’t forget to <a href="https://www.sec.gov/comments/pcaob-2024-06/public-company-accounting-oversight-board-notice-filing-proposed-rules-firm-engagement-metrics#no-back">submit a comment</a>. See the initial comment letter we have submitted to the SEC <a href="https://www.thecaq.org/caq-comment-letter-to-the-sec-in-response-to-pcaobs-adoption-of-final-rules">here</a>. We plan to file comment letters on the individual rules on their comment due dates: December 26th and January 2nd, respectively.

These were not the only major updates to the PCAOB’s agenda last month. As mentioned earlier, the Board also announced that they will no longer consider finalizing their rule on NOCLAR, which was strongly opposed by stakeholders, by the end of 2024. Instead, action on the project has been delayed until next year, with Chief Auditor Barbara Vanich saying during a November 21st meeting, “we want to get it right.”
<h3><strong>Trump Nominates Paul Atkins for SEC Chair Following Chair Gensler’s Departure Announcement </strong></h3>
In SEC news, Chair Gensler last month <a href="https://www.sec.gov/newsroom/press-releases">announced</a> his plans to step down as Chair of the SEC on January 20th. During his tenure, Chair Gensler ushered through several rules that could have significant impacts on the future of corporate reporting for decades to come, from major corporate disclosure rules (climate, cybersecurity) to approving several of the PCAOB’s amended standards and rules.

We thank Chair Gensler for his commitment to our capital markets. Following Gensler’s announcement, Commissioner Lizárraga also <a href="https://www.sec.gov/newsroom/speeches-statements/lizarraga-statement-departure-112224">issued a statement </a>detailing his intention to depart the SEC on January 17th.

Meanwhile, President-elect Donald Trump has <a href="https://apnews.com/article/sec-chair-atkins-gensler-investors-financial-markets-d1c544f1846071b33c75b9f2dd0c1ba4">nominated</a> Paul Atkins, a former SEC Commissioner, to succeed Gensler. Atkins has signaled an interest in reducing regulatory burdens and fostering innovation, particularly in digital assets and cryptocurrency markets. We look forward to continuing to support the SEC as they fulfill their mission to facilitate capital formation, protect investors and maintain fair, efficient and orderly capital markets. ​​​​​​
<h2>CAQ Updates</h2>
<h3><strong>CAQ Publishes Annual Audit Committee Barometer </strong></h3>
We continue to hear from investors that they would like more information – not boilerplate disclosures – around audit committees’ important responsibilities and processes. To that end, we recently published our Audit Committee Barometer, which we have conducted annually with Ideagen Audit Analytics since 2014.

Toplines from the report include:
<ul>
 	<li>The majority of S&amp;P 500 companies (85%) and S&amp;P midcap companies (75%) disclosed the board of directors’ skills matrix.</li>
 	<li>64% of S&amp;P 500 boards disclosed the audit committee is responsible for cybersecurity oversight while 34% of S&amp;P 500 boards disclosed the audit committee is responsible for oversight of ESG information.</li>
 	<li>60% of S&amp;P 500 boards disclosed they have a cybersecurity expert compared with 51% in 2023. ESG or sustainability expertise on the boards of S&amp;P 500 companies also increased by five percentage points since 2023 to 59%.</li>
 	<li>A plateau in disclosure rates was observed across several measures, including considerations in appointing or (re) appointing the external auditor, considerations of the length of tenure, and considerations around how the audit committee evaluates audit fees in relation to audit quality.</li>
</ul>
While we are pleased to see that audit committees are increasingly disclosing information about new oversight areas and their expertise, we hope they will take a fresh look and consider further enhancing their disclosures to ‘tell their story’ and the important work they do.

Download the report <a href="https://www.thecaq.org/audit-committee-transparency-barometer">here</a>.
<h3><strong>CAQ Observes International Fraud Awareness Week </strong></h3>
The CAQ and Anti-Fraud Collaboration (AFC) have conducted a handful of activities in observation of <a href="https://www.fraudweek.com/">International Fraud Week</a>. Recently, the CAQ and AFC held a forum on fraud moderated by Cynthia Cooper, an internationally recognized speaker, best-selling author, and one of Time Magazine’s Persons of the Year for her courage in unraveling the fraud at WorldCom. The forum convened stakeholders across the financial reporting landscape, including investors, external and internal auditors, board members and preparers, and focused on topics including the current landscape, investor expectations, effective reporting and strengthening fraud deterrence and detection. Across the discussions, similar themes emerged, including the need for more detection layers and the rise in international third-party risks. We will be publishing a summary of the key themes and discussion topics in the first quarter of 2025—more to come!

Additionally, amid the growing popularity and ease of use of generative artificial intelligence (genAI) among organizations, the AFC this month launched a resource exploring what genAI is and how the technology may be used to enhance the prevention or detection of fraud and monitor activities that may be indicative of fraud.

Download the report <a href="https://antifraudcollaboration.org/fraud-and-emerging-tech-gen-ai/">here</a>.
<h3><strong>Accounting + Publishes New Episode of “The Bottom Line,” A Podcast for Students </strong></h3>
This fall, we launched a new podcast hosted by two college accounting students, Ti'Anna and Hunter, that features real-world accountants in conversation about everything students need to know to level up in their career journey. Tune in to the latest episode:
<ul>
 	<li><strong>Episode 3: Mastering Soft Skills: Communication and Leadership in Accounting </strong>
<ul>
 	<li>In this episode, the hosts talk about why developing soft skills is just as important as technical accounting knowledge, when it comes to achieving professional success.</li>
</ul>
</li>
</ul>
Listen to the <a href="https://www.joinaccountingplus.com/podcast">podcast here</a>.
<h3><strong>Building a more diverse CPA pipeline</strong></h3>
In the latest entry for the CAQ’s Audit in Action blog, Ken Boyer and Diana Kutz from Ernst &amp; Young LLP highlight the Steelers Showcase, an event series powered by Accounting+, that aims to help educate high school students about accounting careers. The authors state, “Accounting, much like football, is a dynamic field centered around strategic problem solving and innovation.”

Read the article <a href="https://www.thecaq.org/aia-building-a-more-diverse-cpa-pipeline">here</a>.

&nbsp;

<hr />

<h3 style="text-align: center;">Julie Bell Lindsay</h3>
<p style="text-align: center;"><em>Chief Executive Officer, CAQ</em></p>

Capital Markets Pulse | December 2024

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