SEC Chief Accountant Sends Signals on PCAOB Priorities

In early 2026, the Securities and Exchange Commission will appoint a new PCAOB Chair and, in all probability, a new slate of Board members.  Given the SEC’s deregulatory priorities, the new PCAOB is likely to make significant changes to the Board’s agenda.  During the AICPA’s December 2025 Conference on Current SEC and PCAOB Developments, SEC Chief Accountant Kurt Hohl offered hints as to what that agenda may include.

Mr. Hohl’s statement touched on a wide range of accounting and financial reporting issues. With respect to SEC oversight of the PCAOB, he highlighted four points:

• The new PCAOB should take a fresh look at its inspection process.  In particular, the Board should consider whether inspection reports provide meaningful information to stakeholders. “The PCAOB could consider whether shifting its inspection process toward the review of a firm’s system of quality management, corroborated by engagement-level reviews, provides more relevant information about audit quality.”

• The PCAOB should employ a more transparent and responsive audit standard-setting process. The Board should consider adopting an agenda consultation process “to solicit public comment on projects for which both an identifiable problem and feasible solutions exist.”  The Financial Accounting Standards Board uses such a consultation process.

• The PCAOB should more closely align its auditing standards with those of the International Auditing and Assurance Standards Board (IAASB) and look to the IAASB when considering its agenda and updating its rules and standards.  (At present, while the PCAOB considers the IAASB’s standards, there are significant differences between the two boards’ standards.)

• The PCAOB should establish a consultation process to address questions related to the interpretation of audit standards. “Such a process could further enhance audit quality, serve to avoid unnecessary inspection findings, and foster a more collaborative regulatory environment.”

While these changes would affect audit firms more directly than audit committees, they would have significant downstream effects on committee oversight of the auditor. The SEC is likely to appoint new PCAOB Board members soon, and audit committees should stay informed of their priorities.

In particular, changes to the inspection process that deemphasize engagement reviews and prioritize firm quality control processes would affect the information available to committee members and the way they evaluate their auditors’ work.  In addition, a more transparent process for setting the Board’s audit standard-setting agenda could potentially give audit committees a more influential voice in standard-setting.  As discussed in prior Updates, during the Bider/Gensler/Williams era, the PCAOB undertook several standard-setting projects that met with considerable resistance from audit committees.  See, e.g., Audit Committee Members Weigh in on NOCLAR Proposal, August-September 2023 Update.