2025 Profession Outlook: Auditors Will Continue to Provide Stability and Dependability During Changing Times
Dear Readers,
For those who regularly engage with the CAQ and our content, you know that I like to state my outlook for the public company audit profession at the start of each year. While change in the profession has historically moved at a steady pace, the last couple of years have defied this old logic – particularly on the regulatory front. A new pace of change at the PCAOB has redefined their approach to standard-setting, enforcement, and the inspections program. The public company audit profession has also embraced a new pace of change, investing in talent and rapidly developing forms of technology to enhance audit quality.
While we’ve taken a short breather since the close of 2024, I do not expect this reprieve to last long. From a new Administration to the pipeline and talent challenges we face as a profession – I am prepared for an incredibly significant year.
With these key issues in mind, here are my thoughts on the outlook for 2025.
The Regulatory Landscape: More Changes on the Horizon
The evolving landscape of regulation and oversight will continue to shape the public company audit profession. On the SEC front, recent Supreme Court cases like Chevron and Jarkesy signal shifts in the boundaries of the Commission’s authority and enforcement capabilities, respectively. And how these rulings impact the PCAOB – whether through the SEC’s oversight of the PCAOB or otherwise – remains to be seen or tested.
As mentioned in the intro, the PCAOB has passed several standards that audit firms must prepare to implement in 2025, with a handful of others still pending approval (e.g., NOCLAR at the PCAOB; firm and engagement metrics and firm reporting at the SEC). The CAQ has supported the PCAOB’s efforts to update its standards given the fast-paced nature of our capital markets and how audit practices and stakeholder demands have evolved. As we look ahead to standard-setting in 2025, we believe it will be critical for the PCAOB to enhance standard-setting by taking an approach that focuses on engaging with a broad group of stakeholders and incorporating data-driven and rigorous cost-benefit analyses to develop evidence-based, future-ready standards.
Effective regulation of the public company audit profession also depends on impartiality, including from externalities like politics, transparency, and expertise to safeguard the public interest and foster trust. With various discussions happening in Washington, I think it is important not to lose sight of what is working. While no framework can completely eliminate risks, the Sarbanes-Oxley Act created a robust system of checks and accountability, which continues to foster trust in the integrity of financial reporting and the capital markets. The public company audit profession will continue to adapt and innovate to ensure the capital markets retain their integrity and reliability in the face of new challenges.
The CAQ has supported the PCAOB’s efforts to update its standards given the fast-paced nature of our capital markets and how audit practices and stakeholder demands have evolved.
Emerging Technology: A Role for the Audit Profession
The new Administration’s technological priorities have reinvigorated public discourse about innovations like artificial intelligence (AI) and digital assets like cryptocurrency.
Audit firms are making significant investments to harness the transformative potential of genAI, with $6.4 billion in investments announced by some of the leading firms in the last two years. By automating repetitive tasks, AI enables auditors to concentrate on more complex and judgment-intensive areas, leading to more meaningful insights. This shift is also reshaping the early stages of an auditor’s career, offering opportunities to work on innovative and engaging projects. As a profession, we need to continue to spotlight and educate stakeholders on how audit firms are using – or could use – this technology to further enhance audit quality.
Auditors are also engaging with AI more as public companies increasingly report use of this form of technology. According to Bloomberg, 40% of S&P 500 companies mentioned AI in their most recent annual filings to the SEC. Our research shows that AI is being utilized across business functions, from automation to predictive analysis. With AI becoming ingrained in business functions, investors want to better understand this rapidly evolving form of technology’s impact on a public company’s bottom line. And policymakers, recognizing the value of independent checks and balances on company processes and reported information, have taken steps to require assurance over this information (see, e.g., Senator Hickenlooper’s “Validation and Evaluation for Trustworthy AI (VET AI) Act.”). AI systems that behave more like humans are a rapidly evolving landscape with substantial investments but as we’ve seen with digital technologies a new entrant can quickly become a disruptor.
Similarly, as more companies engage with cryptocurrency, and with the SEC likely taking a different stance on the digital currency under Chair Paul Atkins, this is also clearly a space to watch. As regulatory frameworks develop, a question arises as to whether there is a role for the independent public company audit profession to bring the same rigor, knowledge of the businesses they audit, and commitment to quality that defines financial statement audits to company-reported information around crypto – I believe there is.
With AI becoming ingrained in business functions, investors want to better understand this rapidly evolving form of technology’s impact on a public company's bottom line.
The Future of the Profession: Tackling the Talent Challenge with Creative Solutions
The accounting and auditing profession continues to face a pipeline challenge, with fewer individuals pursuing the degree and CPA designation in recent years. This trend is exacerbated by the declining college enrollment and overall decrease in the number of high school students in many parts of the country. While technology certainly impacts talent – whether the demand, required skillset, or attractiveness – it is not the sole solution.
Rather, as many of you have heard me say, the talent challenge – both pipeline and retention – is a multifaceted issue requiring a multifaceted solution where all have a role to play. The CAQ’s Accounting+ campaign is targeting the awareness and misperceptions of what a career in accounting and auditing is, and where it can lead. The AICPA’s National Pipeline Advisory Group published a report to address the talent shortage with potential solutions in six thematic areas. Audit firms are raising their starting salaries. And alternative pathways to obtaining a CPA license, identified by many students as a barrier to entering the profession, are in development across many states. For example, Ohio’s Governor Mike DeWine recently signed into law reforms to permit an added year of experience to meet the “additional 30 hour” requirement under the existing licensure model. It is expected that other states will follow this approach in 2025.
All of these initiatives, which will of course take time to alleviate the talent crisis we are experiencing today, reflect the efforts of many to ensure the profession remains robust and adaptable to the needs of an evolving marketplace.
Alternative pathways to obtaining a CPA license, identified by many students as a barrier to entering the profession, are in development across many states.
The Audit Effect: The Value of Assurance in 2025 and Beyond
At its core, the assurance provided by public company auditors serves as a cornerstone of trust in the $55 trillion US capital markets, which comprise 40% of the world’s capital markets. The work of assurance supports informed decision-making, fosters accountability, and strengthens public confidence in the integrity of organizations—ultimately contributing to the stability and resilience of our capital markets.
In other words, audits matter because they create trust, which enables stability, which instills confidence. This is what the profession calls “The Audit Effect.”
Despite the potential for significant change, as I look ahead to 2025, I believe the “Audit Effect” will remain steadfast. As the profession evolves, the principles of independence, reliability, and transparency will continue to guide public company auditors in serving society, ensuring that assurance remains a vital pillar of economic and organizational resilience in the years to come.
Thank you for engaging with us, supporting the CAQ and supporting public company auditors. To stay up-to-date on the CAQ’s work, visit caq.org or follow us on LinkedIn.
As the profession evolves, the principles of independence, reliability, and transparency will continue to guide public company auditors in serving society.
Julie Bell Lindsay,
Chief Executive Officer, CAQ