Accountability in an Era of ChangeAs organizations prepare for year-end reporting and planning discussions, recent research and regulatory developments point to a common theme: accountability. Whether overseeing the external auditor, monitoring enterprise risks, governing the use of artificial intelligence, or maintaining confidence in financial reporting, audit committees are increasingly being called upon to exercise judgment in areas where risks are evolving and expectations continue to grow. We welcome input; please let us know what you think. Was this email forwarded to you? Create your CAQ Dashboard and sign up for our newsletters so that you never miss an update from the CAQ. In This Issue
PCAOB Finalizes Standard Setting and Research AgendaThe PCAOB recently updated its standard setting and research agendas after considering feedback submitted by stakeholders. Five standard-setting topics were included on the PCAOB agenda:
The research agenda includes data and technology, firm and engagement performance metrics, and communications with audit committees. The PCAOB also announced it is considering staff guidance on the use of artificial intelligence (also referred to as super intelligence), digital assets, and accumulating identified misstatements. The agenda returns attention to certain topics that had previously been proposed but not finalized under previous administrations, such as NOCLAR. We believe a thoughtful approach to this and other topics that considers the rationale for action and defines an appropriate, limited scope is an important first step. Overall, the agenda appears balanced and responsive to feedback provided by a range of stakeholders. While data and technology is a major “top-of-mind” issue for both issuers and auditors, the signaling of guidance is a welcome step that could provide timely clarity based on evolving practices while preserving flexibility for continued technological innovation. One notable aspect of the PCAOB’s updated research agenda is its focus on communications with audit committees and firm and engagement performance metrics. While these projects remain in the research stage, they reflect the PCAOB’s continued interest in understanding how audit committees evaluate and oversee auditors and whether there are opportunities to strengthen those interactions. Risk Oversight: Boards are Spending More Time on Risk, but Gaps RemainBoards are spending more time discussing risk than they were just a few years ago. Yet new research from EY Center for Board Matters and Corporate Board Member suggests many boards continue to struggle with the integration of risk and strategy. The survey found that 60% of directors report spending more time on risk at the full-board level than they did two years ago, while many still identified risk-strategy integration (38%), understanding interconnected risks (38%), and improving scenario planning (44%) as areas needing improvement. The research also highlights growing concerns around resilience. Fewer than half of respondents reported that their organization’s risk appetite is formally documented, while 42% indicated that a failure of a critical vendor would significantly or severely disrupt their organization. For audit committees, the findings reinforce that effective oversight is not simply about time spent exercising oversight. It is about connecting the dots to support decisions regarding strategy, resilience, and emerging risks. Questions for Audit Committees to Consider
AI Oversight Moves from Adoption to AccountabilityThe conversation around artificial intelligence is maturing. New research from the KPMG Global AI Pulse Q3 2026 survey suggests organizations are increasingly shifting their attention from AI experimentation toward governance, accountability, resilience, and value realization. The survey found growing use of monitoring dashboards, executive accountability structures, and governance processes designed to manage AI at scale. The findings suggest that organizations are increasingly asking questions that extend well beyond technology deployment, including who is accountable when AI influences decisions, how to evaluate the return on AI investments, and how to manage growing dependencies on external providers and models. As AI becomes more deeply embedded in organizations, audit committees may find that effective oversight depends less on understanding the technology itself and more on understanding governance, accountability, controls, and risk management. Directors themselves see room for improvement. Based on PwC’s recent Annual Corporate Directors Survey, 71% of directors believe boards need to strengthen their AI skills to provide more effective oversight, and there are still perceived gaps in the quality of information needed to oversee AI strategy and execution, assess progress and ROI on AI, and understand workforce readiness. Questions for Audit Committees to Consider
Financial Reporting Enforcement in Focus at the SECThe SEC recently announced the creation of a dedicated Financial Reporting and Accounting Unit (FRAU) within its Division of Enforcement. As discussed in a recent publication by Skadden, the unit represents a significant organizational shift: The SEC is consolidating nationwide resources and specialized expertise to investigate issues related to accounting and financial reporting in public companies, general accounting and auditing misconduct. Accounting and financial reporting enforcement matters historically have been handled by staff across the SEC’s headquarters and regional offices. The new unit changes this model by merging investigative resources and subject-matter expertise into a single, dedicated program and indicates a renewed focus on these issues. While audit committee agendas have expanded to include cybersecurity, AI, third-party risk, and other emerging topics, the formation of FRAU serves as a reminder that confidence in the capital markets continues to rest on high-quality financial reporting, effective internal controls, sound judgements, and strong governance. For audit committees, the development underscores the importance of maintaining focus on core responsibilities even as oversight expectations broaden. Meet the CAQ’s New CEOThe CAQ recently welcomed Dave Sullivan as its new CEO. Get to know Dave, his background, and more about this new chapter for the CAQ in the full announcement. ICYMI: CAQ Public Policy Technical Alert (PPTA), September 2026Each 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 September 2026 Alert included these featured articles. PCAOB Adopts Amendments to QC 1000The PCAOB adopted amendments to QC 1000, A Firm’s System of Quality Control, the PCAOB’s quality control standard, and related amendments to PCAOB forms and the QC reporting rule. The adopted amendments do not change the effective date of QC 1000, which is December 15, 2026. The amendments are subject to approval by the Securities and Exchange Commission (SEC). If approved by the SEC, the amendments to QC 1000 and to the related PCAOB rule and forms will become effective on December 15, 2026. ICFR’s Role in the Accountability FrameworkThe CAQ posted an article discussing the role of internal control over financial reporting within the broader public-company accountability framework. Webinar Replay: PCAOB Developments & Priorities: What Audit Committees Need to KnowThe CAQ hosted a webinar featuring PCAOB Board Member Steve Laughton and Weyerhaeuser Audit Committee Chair Sara Lewis, and moderated by Vanessa Teitelbaum, Senior Director, Professional Practice. The discussion focused on the PCAOB’s current priorities and initiatives and practical implications for audit committee oversight in today’s evolving regulatory landscape. Watch the replay here. Ghosts, Goblins, and Monster MashesWith Halloween right around the corner, we started wondering how many spooky songs we actually know. Turns out, quite a few. A recent roundup from TODAY compiled 66 of the most popular Halloween songs of all time, ranging from classic favorites like “Monster Mash,” “Thriller,” and “Ghostbusters” to newer additions that have found their way onto October playlists. A few fun facts we learned:
If you’re looking for a soundtrack for a Halloween gathering, pumpkin carving session, or neighborhood trick-or-treating, this list may provide a few ideas. Just be warned: once you hear “Monster Mash,” there’s a good chance it will be stuck in your head for the rest of October. |
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Questions and comments about Audit Committee Insights can be addressed to Vanessa Teitelbaum, Senior Director, Professional Practice (vteitelbaum@thecaq.org). 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. About the Center for Audit Quality The CAQ champions the public interest in the capital markets by:
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. For more information, visit www.thecaq.org.
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