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 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.
In This Issue
Acting Chairman Statement on Climate-Related Disclosure Rules
The SEC released a statement by Mark T. Uyeda, Acting Chairman, regarding action taken on The Enhancement and Standardization of Climate-Related Disclosures for Investors rule that was adopted by the Commission on March 6, 2024. Uyeda has directed the Commission staff to notify the Court of the changed circumstances and request that the Court not schedule the case for argument to provide time for the Commission to deliberate and determine the appropriate next steps in these cases. The Commission will promptly notify the Court of its determination about its positions in the litigation.
SEC Investor Advisory Committee to Examine the Disclosure of Artificial Intelligence’s (AI’s) Impact on Company Operations; and Retail Investor Fraud in America at March 6 Meeting
The SEC announced the SEC Investor Advisory Committee will hold a public meeting at the SEC headquarters in Washington, D.C., on March 6, at 10 a.m. ET. The meeting will also be webcast on the SEC website. The committee will host two panels:
- Disclosure of AI’s Impact on Operations; and
- Retail Investor Fraud in America
The Committee will also discuss a potential recommendation regarding preserving investors’ ability to bring claims under Section 11 of the Securities Act of 1933. The full meeting agenda is available on the committee’s webpage.
SEC to Host Roundtable on AI
The SEC announced it will hold a roundtable discussion on AI in the financial industry. The event takes place on March 27, 2025, from 9 a.m. to 4 p.m. at the SEC’s headquarters in Washington, D.C., and is open to the public for either in-person or virtual attendance. The AI roundtable will discuss the risks, benefits, and governance of AI in the financial industry. SEC Acting Chairman Mark Uyeda and SEC Commissioners Hester Peirce and Caroline Crenshaw are expected to deliver remarks. Information on the agenda, participants, and the process for the public to submit comments will be published on the SEC AI Roundtable’s event page.
SEC Announces Cyber and Emerging Technologies Unit to Protect Retail Investors
The SEC announced the creation of the Cyber and Emerging Technologies Unit (CETU) to focus on combatting cyber-related misconduct and to protect retail investors from bad actors in the emerging technologies space. The CETU, led by Laura D’Allaird, replaces the Crypto Assets and Cyber Unit and is comprised of approximately 30 fraud specialists and attorneys across multiple SEC offices.
SEC Staff Release Statement on Meme Coins
The SEC Division of Corporation Finance released a statement on “meme coins” to provide greater clarity on the application of the federal securities laws to crypto assets.
PCAOB withdraws proposed rules on Firm Reporting and Firm and Engagement Metrics
On February 11, 2025, the PCAOB withdrew the proposed rules on Firm Reporting (PCAOB-2024-07) and Firm and Engagement Metrics (PCAOB-2024-06).
PCAOB Staff Report Shares Reminders, Good Practices, and Other Considerations for Audit Firms Using the Work of Specialists
The PCAOB released a new staff Spotlight report, “Considerations for Audit Firms Using the Work of Specialists.” This Spotlight highlights recent staff observations that are designed to help audit firms ensure appropriate procedures are performed when using the work of a specialist.
PCAOB Posts New Knowledge Checks to Help Auditors Gauge Understanding of New Quality Control and New Confirmation Standards
The PCAOB posted a new series of knowledge checks designed to help auditors gauge their understanding of important aspects of QC 1000, A Firm’s System of Quality Control. Topics covered in the knowledge checks include risk assessment, roles and responsibilities under QC 1000, considerations related to ethics and independence, and more.
Additionally, the PCAOB posted a new knowledge check designed to help auditors gauge their understanding of important aspects of AS 2310, The Auditor’s Use of Confirmation. This new standard replaces an interim standard, AS 2310, The Confirmation Process, and is effective for audits of financial statements for fiscal years ending on or after June 15, 2025.
The knowledge checks are the latest in a series of resources the PCAOB has recently released to assist and inform auditors in their implementation of PCAOB standards and rules.
Board Member Christina Ho to Host Miami Forum for Auditors of Small Businesses and Auditors of Broker-Dealers
The PCAOB announced that Board Member Christina Ho will host an in-person forum on auditing in the small business environment and on auditing broker-dealers. The forum will take place in Miami at the University of Miami on March 18, 2025. The forum – part of a series of forums that are each hosted by a PCAOB Board Member – had been scheduled previously for October 9, 2024, but was disrupted by Hurricane Milton. There is no fee to attend the one-day event in Miami, but advance registration is required.
AICPA to Seek Feedback on Options to Update Independence Rules Governing Private Equity Investments in Accounting Firms
AICPA announced that a task force of its Professional Ethics Executive Committee (PEEC) will seek public comment on its preliminary conclusions about revisions to independence rules related to alternative practice structures, changes driven by the increasing prevalence of private equity investment in accounting firms. The committee’s Alternative Practice Structures Task Force will ask stakeholders to weigh in on its conclusions and two interpretation options once a discussion memorandum is posted. The task force will take comments through June 15 on its preliminary conclusions and the draft interpretation option stakeholders prefer regarding independence under alternative practice structures. The PEEC would use that feedback to supplement its research and select the preferred option, followed by a formal exposure draft.
Financial Reporting Council (FRC) Launches Market Study Into SME Audit and Reporting Challenges
The FRC launched a market study examining how effectively the audit market serves small and medium-sized enterprises (SMEs) and exploring opportunities to reduce their reporting burden where possible. This study is the first phase of the FRC’s broader campaign to support U.K. SMEs to access audit services and secure the capital they need for growth.
FRC Sets Out Recommendations for the Sustainability Assurance Market
The FRC published the final report from its market study into the assurance of sustainability reporting. The 2024 study found that while the U.K.’s market for the assurance of sustainability reporting is functioning well, there are concerns over quality consistency amid growing demand.
International Auditing and Assurance Standards Board (IAASB) Issues Post-Exposure Consultation and Invitation to Comment on Its Listed and Public Interest Entities Project
The IAASB released the Post-Exposure Consultation: Invitation to Comment Before the IAASB Finalizes the Narrow Scope Amendments to the ISQMs and ISAs as a Result of the Revisions to the Definitions of Listed Entity and Public Interest Entity in the IESBA Code. This consultation sets out the IAASB’s final position, rationale, and pathway to broader differential requirements relating to the definitions of listed and public interest entities in the International Standards on Quality Management (ISQMs) and International Standards on Auditing (ISAs). Feedback is requested by March 27, 2025.
International Accounting Standards Board (IASB) and International Sustainability Standards Board (ISSB) Review Stakeholder Feedback on Climate-Related and Other Uncertainties in Financial Statements in Joint Board Meeting
The IASB and the ISSB held a joint board session on February 19, 2025. At this meeting, the IASB technical staff presented a summary of stakeholder feedback on the IASB’s Exposure Draft Climate-related and Other Uncertainties in the Financial Statements. The meeting papers and video of the session are accessible from the IASB-ISSB joint meeting page.
IAASB and International Accreditation Forum (IAF) Strengthen Collaboration to Enhance Sustainability Assurance
The IAASB and the IAF formalized plans to collaborate, reinforcing a shared commitment to high-quality sustainability assurance. This partnership aims to enhance trust in corporate sustainability disclosures by establishing a strong global framework for assurance.
February 2025 IASB Update and Podcast Now Available
The IFRS Foundation announced the IASB Update, summarizing the February 2024 IASB meeting, is now available. The latest episode of the IASB podcast is also available. In this episode, IASB Chair Andreas Barckow and Vice-Chair Linda Mezon-Hutter join Executive Technical Director Nili Shah to discuss highlights from the IASB meeting held on February 18-19 and the IASB–ISSB meeting held on February 19. They cover:
- Financial Instruments with Characteristics of Equity;
- Intangible Assets;
- Amortized Cost Measurement; and
- Climate-related and Other Uncertainties in the Financial Statements.
IASB Issues a Major Update to the IFRS for SMEs Accounting Standard
The IASB issued a major update to the IFRS for SMEs Accounting Standard, which is currently required or permitted in 85 jurisdictions. The Standard defines SMEs as entities without public accountability that prepare general purpose financial statements. This update is effective for annual periods beginning on or after January 1, 2027, with early application permitted.
ACC Comment Letter to the SEC Regarding the Adoption of PCAOB Firm Reporting and Firm and Engagement Metrics Final Rules
The CAQ posted the Audit Committee Council (ACC) comment letter to the SEC regarding the final rules adopted by the PCAOB related to Rules on Firm and Engagement Metric and Firm Reporting. In the ACC’s view, it is not in the public interest for the SEC to approve these Final Rules, nor would doing so further the protection of investors. On February 11, 2025, the PCAOB withdrew the proposed rules on Firm Reporting and Firm and Engagement Metrics.
Institutional Investor Survey: Research Findings, Q4 Survey
The CAQ shared the research findings from its fourth quarter survey of institutional investors. The research is part of the CAQ’s efforts to engage a broad array of stakeholders of company-prepared information. The survey helps inform the CAQ team on topics of interest to institutional investors.
Analysis of AI-Related Information in S&P 500 Companies’ 10-Ks
The CAQ analyzed S&P 500 companies’ Form 10-Ks to understand the extent of AI-related disclosures in those SEC filings. The CAQ, using data by ESGAUGE, looked at the most recent SEC Form 10-Ks for S&P 500 companies available as of June 2024. The CAQ observed that 359 S&P 500 companies, approximately 72%, mentioned AI-related information in their 2023 10-K.
Analysis of Climate-Related Information in S&P 500 Companies’ 10-Ks
The CAQ analyzed S&P 500 companies’ Form 10-Ks to understand the extent of climate-related disclosures in those SEC filings. The CAQ, using data by ESGAUGE, looked at the most recent SEC Form 10-Ks for S&P 500 companies available as of June 2024. The CAQ observed that most S&P 500 companies mentioned climate-related information in their 10-K. The number of S&P 500 companies mentioning climate-related information in their 10-K increased almost 4%, from 477 companies in 2022 to 494 companies in 2023.
Audit Committee Practices Report: Common Threads Across Audit Committees, 4th Edition
The CAQ published the fourth edition of the Audit Committee Practices Report, which is a joint effort between Deloitte’s Center for Board Effectiveness and the CAQ. Outside of financial reporting and internal controls, the top three priorities of the audit committee over the next year are consistent with last year:
- Cybersecurity
- Enterprise risk management (ERM)
- Finance and internal audit talent
Beyond these, there were slight changes in the remaining priorities compared to last year. The CAQ and Deloitte also found that a majority of respondents are interested in enhancing the effectiveness of audit committee meetings. When presented with various strategies to achieve this, the two most prominent areas identified were the quality of presentations during meetings and the level of discussion and/or engagement from members. These and other observations on committee effectiveness are further explored in the report.
Welcome to Audit Committee Effectiveness Webinar
The CAQ announced that the fourth edition of the Audit Committee Practices Report will be the focus of Episode 7 of Welcome to Audit Committee Effectiveness, a webinar series by the CAQ and the National Association of Corporate Directors. The webinar is scheduled for 13:00 on April 8, 2025. Based on survey findings, this webinar will offer 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.
Audit Committee Insights: January/February 2025
The CAQ released another edition of Capital Markets Pulse, a monthly newsletter that offers insights, resources, and tools on the latest issues impacting the capital markets. Some of the topics discussed were:
- Cyber, ERM, and Talent Are Top Priorities for Audit Committees
- Safeguarding Crypto Assets: SEC SAB 121 Rescinded
- PCAOB Withdraws Firm and Engagement Metrics and Firm Reporting Proposed Rules
- What ever happened to the PCAOB NOCLAR Proposal?
SEC Regulations Committee: Highlights of October Joint Meeting
The CAQ posted the highlights of the October 21, 2024, Joint Meeting of the SEC Regulations Committee and the SEC Staff. Topics addressed at the meeting include:
- Check Box Requirements for Changes and Error Corrections
- Questions related to ASU 2023-07/Segments
- SPAC Critical Audit Matters
- AS 1310, Notification of Termination of the Auditor-Issuer Relationship
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 www.thecaq.org.
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.
Questions and comments about the Public Policy & Technical Alert can be addressed to Donnie Heinerichs, Manager, ESG Initiatives (dheinerichs@thecaq.org) or Annette Schumacher, Senior Director, Professional Practice (ashumacher@thecaq.org).