Audit Committee Insights | August 2026

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In This Issue:

• The New PCAOB
• Big Proposals from the SEC
• How Institutional Investors are Using AI
• Top of Mind for Audit Committees: AI, Fraud, and Oversight Priorities 
• AI Drafting Board Minutes?
• CAQ’s Audit Committee Council Spotlight: Debbie Dial, Audit Committee Member Dow Inc.
• ICYMI: CAQ Public Policy Technical Alert (PPTA), June 2026
• Are Your Memories Playing Tricks on You?

The New PCAOB

PCAOB Chair Logothetis articulated his vision for the PCAOB in a recent speech at the USC SEC Financial Reporting Conference. These remarks, along with Chair Logothetis’ previous remarks during an open meeting on the Board’s draft strategic goals and objectives, provide insights into the PCAOB’s priorities and plans for the coming years. Here are the top areas of focus from Chair Logothetis along with recent developments in these areas:

Stakeholder Engagement and Input – The PCAOB continues to solicit feedback early and often from stakeholders. This feedback will shape the direction of the Board and their efforts. Formed from input during the initial request for public feedback on strategic priorities, the Board has released requests for public comment on their standard setting and research agendas as well as draft strategic goals and objectives. Comments on these requests are due August 7^th and September 4^th, respectively.

During the strategic plan open meeting, the Chair announced that the PCAOB will be publishing a feedback-mapping framework that will show how stakeholder input is weighed and applied in the formulation of the strategic priorities, goals, and objectives. He also announced that the Board will provide quarterly progress against the final strategic plan.

Inspections Modernization – Changes in technology and quality control standards have reshaped the auditing profession in recent years, creating opportunities to modernize the the PCAOB inspections program. Chair Logothetis is looking to modernize the inspection program through shifting to a program with greater focus on audit firms’ system of quality control. The PCAOB recently formed a multistakeholder Inspections Modernization Council to assist the PCAOB in update the inspection program so it reflects a focus on quality control and the current realities of public company audits.

The PCAOB is also undergoing several leadership changes during this period:

• Chief Auditor Barb Vanich departed the PCAOB on July 15^th after more than 17 years of service.
• Dr. Ying Li Compton was named as the new Chief Economist and Director of the Office of Economic and Risk Analysis.
• There are several open roles that the PCAOB is looking to fill. These roles include Special Adviser for Technology Modernization and Innovation, and a new Chief Auditor and Director, Professional Standards . Interested professionals are encouraged to apply using the links above.

Big Proposals from the SEC: Semiannual reporting and Filer Status Simplification

The Audit Committee Council (ACC) – an independent advisory committee of the Center for Audit Quality – responded to the SEC’s proposed rules around semiannual reporting as well as the simplification of filer status.

Related to semiannual reporting, the ACC supports the Commission’s important initiative to foster an environment in which more companies are willing to enter – and remain in – the public markets. For this reason, they support the Proposed Rule providing all companies with the option to report on a semiannual basis. This support for the Proposed Rule is grounded in its optionality. In its letter, the ACC said it is appropriate for a company’s management, along with its audit committee and after obtaining stakeholder input, to determine the appropriate frequency of interim financial reporting. Regardless of the cadence or the form, financial information provided to the capital markets must continue to be reliable.

As it relates to the filer status proposal, the ACC letter includes the following key points:

1. SOX Section 404(b) is an important investor protection.
2. The proposed threshold increase ($2 billion in public float) is too broad.
3. As proposed, a newly public company would need to remain above the public float threshold for two consecutive years before becoming a large accelerated filer (LAF). Therefore, we suggest eliminating the five-year seasoning threshold for LAF status.
4. There are additional actions that can reduce burdens on existing public companies, including updating management guidance and modernizing PCAOB inspections.

How Institutional Investors are Using AI

The CAQ released the latest institutional investor survey on the use of AI in investment research and decision making.

Key Takeaways

• AI is a mainstream investment research tool, and is likely to grow in importance. 68% of investors report extensive or moderate AI use in investment research and decision making.
• Most companies are still building their AI capabilities. While 38% have proprietary AI tools today, another 54% are either developing them or plan to do so in the future.
• Currently AI is mostly used for qualitative type research such as analyzing earnings calls, summarizing the MD&A and risk analysis, extracting financial and operational metrics, and for evaluating other qualitative type statements or disclosures. Use for financial and risk scenarios and projections is likely to grow.
• While AI informs the investment decision process, for most it does so with human oversight (60%). For most of the remaining 40%, AI has limited or no role in investment decisions.
• The greatest value of AI today is automating manual tasks and improving efficiency. Investors rate speed of analysis (80%) and reduction in manual workload (79%) as AI’s top benefits, followed by identifying anomalies, patterns, insights, and risks.
• AI is perceived to improve investment performance. Two-thirds (67%) say AI has improved their firm’s investment performance over the past year, most often through better decisions, faster analysis, and improved risk assessment.

Top of Mind for Audit Committees: AI, Fraud, and Oversight Priorities

As audit committees prepare for upcoming meetings and discussions, several recurring themes emerged across recent governance publications. PwC and EY released their quarterly audit committee resources that provide some things to keep top of mind as you think about your governance responsibilities.

• AI and ICFR – AI is becoming embedded in everyday tools like ERP systems where companies run the risk of having “invisible AI” influence their financial reporting. These tools are also influencing how work is being routed and reviewed, along with changing what the evidence looks like. Additionally, companies should consider potential challenges with “shadow AI” where employees are using tools outside of approved channels. Consider the impact of these tools on a company’s internal controls and have a discussion with management and other stakeholders to fully understand the risks that they pose. A good tool to consider leveraging is FEI’s new publication, AI Framework: Internal Control Over Financial Reporting, which guides companies in integrating AI into financial reporting while maintaining effective ICFR.
• Learning from Project Glasswing – Project Glasswing is an initiative led by Anthropic in collaboration with several critical software companies like Amazon Web Services, Microsoft, and Google, that seeks to identify and remediate critical software vulnerabilities using the new Anthropic Mythos model before bad actors have access to this model. This project demonstrates the importance of understanding a company’s technological footprint. Weaknesses can be exploited much faster in today’s environment and as AI is increasingly adopted, the risks become greater. Resilience is no longer about avoiding incidents completely. Companies should understand where they have dependencies on certain software providers or tools and should consider the potential impact on operations should they lose access to these tools.
• Revisiting fraud risk – Economic uncertainty, rapid technological change, and evolving incentive structures continue to reinforce the importance of fraud risk discussions. Now is a good time for audit committees to ensure that internal audit plans are appropriate and that the company has the right anti-fraud defenses in place. Some questions to consider:
  • How is management refreshing the company’s fraud risk assessment to reflect changes in operating model, technology, and third-party reliance?
  • Which processes or workflows are currently most vulnerable to fraud or manipulation, and what has changed in those areas over the past year?
  • How is management identifying where automation, AI, shared services, or redesigned workflows may be weakening segregation of duties, increasing override risk, or reducing accountability?

AI Drafting Board Minutes?

Are you using AI to record and transcribe board meetings? If so, you may want to read below to learn more. In a recent publication, Skadden explores the use of AI tools in the boardroom and provides some things to carefully consider before implementing these tools.

• Potential litigation – Creating detailed records of confidential board discussions could create problems if they have to be shared during litigation. The use of AI by directors is generally not protected under attorney-client privilege and may not be protected by work product protection, meaning that they also may be discoverable during litigation. Lastly, AI-generated content should be preserved, like any other records, when litigation becomes likely.
• Don’t avoid AI, implement guardrails – Although AI use poses risks to boards, it should not deter boards from adopting these tools. Boards should have discussions with counsel and consider implementing guardrails like:
  • Deciding whether or not to transcribe meetings or parts of meetings.
  • Using AI tools in ways that protect privilege and work product where possible.
  • Setting clear procedures for review, approval, retention and deletion of AI-generated records.

CAQ’s Audit Committee Council Spotlight: Debbie Dial, Audit Committee Member Dow Inc.

We sat down with Debbie Dial, a member of the CAQ’s Audit Committee Council, to shed light on her career and journey to the audit committee.

How did you get started in accounting? What was your first and last job?

I originally planned to go to law school, but I pursued an accounting degree instead. I started my career at KPMG, thinking it would be temporary, but I quickly realized I enjoyed the work. After about ten years in public accounting, I entered a PhD in Accounting program intending to teach, but the research focus wasn’t the right fit for me. I then moved to AT&T, where I held several roles and ultimately my final role as Chief Accounting Officer.

What was the first corporate board that you joined? How did you get on that board?

My first corporate board was Dow. My initial connection with the board was made through a New York Stock Exchange networking group for board ready executives. I learned of this group through discussions with the CEO and Chair of AT&T as I was approaching retirement and I had expressed an interest in board service.

What do you enjoy most about serving on an audit committee? How is it different from other board committees?

I enjoy audit committee work because it aligns so closely with my background, even if the industries are different. I find serving on the audit committee to be interesting and I hope to provide value to the companies I serve. I also value the opportunity to observe and share best practices across companies.

What else do you do outside of board service?

Professionally, I stay engaged with various accounting organizations and work to support the University of Texas at Austin in various capacities. Personally, I enjoy supporting my favorite sports teams, running, and gardening. Lately, I’ve been spending some time learning to play golf with my husband.

What trends or risks do you think audit committees will need to focus on in the next few years?

I see AI—especially its intersection with cybersecurity—as a major area of focus. Cyber has been a focus, but AI adds a new element to consider. Governance structures for AI are still evolving at the board level and the committee level. I also think shifts in capital markets and funding structures will continue to influence corporate risk profiles and shape how companies approach transactions.

In addition to Debbie’s role on the audit committee for Dow Inc., she also serves on the audit and finance committees for Hubbell Incorporated, and on the audit committee of Booz Allen Hamilton. She joined the CAQ’s Audit Committee Council in April of 2026.

ICYMI: CAQ Public Policy Technical Alert (PPTA), June 2026

Each month, the PPTA highlights and examines the regulatory, standard-setting, legislative, and broader financial reporting developments impacting the public company audit profession. The CAQ’s June 2026 Alert included these featured articles.

Onset of Mandatory Sustainability Requirements Begins to Impact Global Reporting, Study by International Federation of Accountants (IFAC), AICPA, and CIMA Finds
The AICPA announced that an updated report from the AICPA, CIMA, and IFAC shows the global sustainability reporting ecosystem is becoming less fragmented as more of the world’s largest companies begin to adopt or form plans to use the International Sustainability Standards Board (ISSB) standards and European Sustainability Reporting Standards (ESRSs).

Are Your Memories Playing Tricks on You?

Some of you have heard about the Mandela Effect before, but for those who have not, it is a phenomenon in which large groups of people confidently remember something differently than how it actually occurred. It was first coined in 2009 when a researcher had discovered that she wasn’t alone in her memory that Nelson Mandela had died in prison in the 1980s when in fact he had lived until 2013. While we were familiar with the concept, this article just blew our minds! We’ve included a few of the most shocking below, but you should go through the list and see how many things you have been getting wrong over the years.

• The famous Darth Vader quote from Star Wars isn’t “Luke, I am your father”, is actually “No, I am your father”.
• Many think that Queen’s hit “We Are The Champions” ends with Freddie Mercury singing “We are the champions…of the world”, but he actually just sings “We are the champions” and then trails off.
• The Monopoly Man doesn’t wear a monocle
• “Sex in the City” is incorrect, it’s “Sex and the City”

This newsletter is intended as general information and should not be relied upon as being definitive or all-inclusive. The CAQ encourages readers to refer to applicable rules, standards, guidance, and other resources in their entirety. All entities should carefully evaluate which requirements apply to their respective organizations.