Welcome back to another edition of Audit Insider!
The start of Q2 has been an action-packed one for the profession, and in this edition, we have a lot to cover. I had the opportunity to speak at EY’s Fortune 250 Controller Roundtable, the PCAOB opened a public comment period on its strategic priorities, and the CAQ submitted comment letters weighing in on some important regulatory rulemakings at the SEC and OCC. Below, we cover those developments alongside a look at how auditors are navigating an ever-changing capital markets environment, the latest on fraud and emerging technology, and a conversation with a leader from BDO on what AI means for their practices.
Read on for what I’m tracking.
Please note that these perspectives are my own. Subscribe here so that you never miss a public company auditing update.
CAQ Comment Letters: Regulation S-K and S-X
In March, the CAQ submitted a comment letter to the SEC in response to the agency’s ongoing review of Regulation S-K and Regulation S-X. As noted in the January/February edition, the SEC has been soliciting input on whether certain non-financial disclosures have grown redundant or overly prescriptive, and whether a return to a more principles-based framework would better serve investors.
Our letter emphasizes that auditor’s important role in the disclosure chain and address several key topical areas including advancing a more principles-based, materiality driven disclosure framework, eliminating overlapping or duplicative disclosure requirements, modernize and simplify existing Regulation S-K requirements. We also weighed in on Regulation S-X, advocating for updates that reflect how financial reporting has evolved in the decade-plus since the rules were last comprehensively reviewed. Read more here.
CAQ Submits Letter on QC 1000 Implementation Experience and Costs
The CAQ submitted a letter to the PCAOB sharing member firm perspectives on the implementation of QC 1000, the Board’s quality control standard. The letter draws on real-world experience from the first phase of implementation. The letter also includes estimated cost information, informed by data obtained from a subset of CAQ member firms, to help illustrate the potential economic impact of implementing QC 1000. PCAOB Chair Logothetis announced in March that he directed the staff to develop for the Board’s consideration a supplemental request for comment to seek public input on certain provisions of QC 1000.
This is an area where auditors’ experience on the ground makes an enormous difference for sound standard-setting, and the CAQ is committed to making sure those perspectives reach the Board as they evaluate the standard’s rollout. You can find the full letter here.
PCAOB Requests Public Comment on Strategic Priorities
The PCAOB recently held an open board meeting to consider a request for public comment on its strategic priorities, a significant step under new leadership. Chair Logothetis has signaled a commitment to transparency in how the Board sets its agenda, and the consultation process gives stakeholders a genuine opportunity to weigh in on where the PCAOB focuses its resources over the next several years before they draft their Strategic Plan.
What we do know about Chair Logothetis so far suggests a leader oriented toward collaboration and a careful, evidence-based approach to rulemaking. The Board has also announced a new consultation program. Both moves are encouraging signs that the PCAOB is interested in hearing from the profession as it charts its course. The CAQ will be submitting comments, and we encourage other stakeholders to do the same.
Fighting Fraud
Fraud and Emerging Tech: The Deepfake Threat
The Anti-Fraud Collaboration’s latest resource takes a clear-eyed look at one of the most rapidly growing fraud vectors in the financial reporting environment. Deepfakes use AI to generate audio and video that convincingly impersonate real individuals, and they are no longer a theoretical risk. They are being used in business email compromise schemes, fraudulent wire transfer authorizations, and attempts to deceive auditors during confirmation procedures.
The resource walks through how these tools work, where they are being deployed in corporate fraud schemes, and how audit committees, management, and auditors can build the awareness and protocols needed to detect and deter them. As with other fraud risks, the fundamentals apply: strong controls, a skeptical mindset, and clear escalation paths. The technology is new; the principles are not.
New Resource: The Role of the Auditor, Internal Audit Edition
Our new resource, developed in collaboration with the Anti-Fraud Collaboration and the Institute of Internal Auditors, explores how internal auditors can strengthen their approach to fraud risk assessment. The publication explores the intersection of internal and external audit functions, where their mandates overlap, and how coordination between the two strengthens the overall control environment. It is a timely addition, given increasing attention from audit committees and boards on the full scope of assurance activity happening inside their organizations. The resource includes practical frameworks for both practitioners and governance professionals.
FinCEN Proposes Whistleblower Program
The Financial Crimes Enforcement Network (FinCEN) has proposed a rule to establish a new whistleblower program that would provide financial incentives and protections for individuals who report violations of the Bank Secrecy Act and related anti-money laundering laws. The program mirrors, in some respects, existing whistleblower mechanisms at the SEC and CFTC.
For auditors and audit committees, this is worth tracking. Whistleblower programs historically generate an uptick in tips related to financial fraud and reporting irregularities. Understanding how information flows through these new channels, and ensuring internal controls and ethics programs are robust enough to surface issues internally first, is an important part of the governance conversation.
SEC Appoints David Woodcock as Director of the Division of Enforcement
The SEC has appointed David Woodcock as Director of the Division of Enforcement, effective May 4, 2026. Woodcock returns to the Commission after serving as Director of the Fort Worth Regional Office from 2011 to 2015, and most recently was chair of the Securities Enforcement Practice Group at Gibson, Dunn & Crutcher. Notably for the audit profession, he is a CPA and previously created and chaired the SEC’s cross-division Financial Reporting and Audit Task Force, which was designed to enhance detection and prosecution of accounting fraud and false financial statements. His background suggests the Division’s focus on traditional accounting and disclosure fraud is likely to continue, and the profession will be watching his early priorities closely.
Voices from the Audit Committee: A Supplemental Report
The CAQ recently published Voices from the Audit Committee: A Supplemental Report as a companion piece to the Audit Committee Practices Report, developed with Deloitte’s Center for Board Effectiveness. The report is based on candid conversations with sitting audit committee members about the issues at the top of their agendas. The findings reinforce what many of us hear across the profession: audit committees are managing an unusual degree of complexity right now, from the integration of AI into financial reporting processes to the evolving regulatory and geopolitical environment. Engagement quality and the auditor’s ability to surface and discuss emerging risks are consistently high on the list of what audit committees value most.
This month, we’re excited to feature insights from Tara Pendleton, Assurance Professional Practice Principal – Enablement at BDO.
Why is the human element behind technology implementation more important than ever before?
Anything that can be automated will be automated, which is making uniquely human capabilities more valuable… curiosity, leadership, empathy. Technology only delivers value when professionals know how to interpret results, apply judgment, and integrate tools into sound processes. Even the most advanced systems require people to assess context, challenge anomalies, and ensure outputs make sense.
How does your firm blend auditor expertise with technology?
Effective enablement—through clear communication, training, and workflow alignment—ensures teams can use technology confidently and responsibly. Auditors blend expertise with technology by pairing human judgment with tools that enhance analysis, risk identification, and efficiency while maintaining oversight and governance. This balance ensures technology strengthens, rather than replaces professional skepticism.
How is AI enabling auditors to do higher impact work?
Different types of AI – machine learning, for example – are already more than capable of performing binary, pass/fail, black/white testing of whole populations with less reliance on sampling. Auditors are focusing on the highest-risk areas within full data sets, highlighting unusual patterns. Intelligent automation and agents are automating routine tasks, so more time is spent on complex, judgment-heavy work.
How does this improve the independence and objectivity of the audit and protect investors?
These tools improve consistency and transparency, helping auditors base decisions on complete and traceable information. Strong governance frameworks ensure AI outputs directing human reviews are integral, mitigating risks like bias or over-reliance. By sharpening risk assessment and reducing the likelihood of manual error, technology enhances independence and objectivity. Ultimately, this leads to more reliable audits and better protection for investors.
Webinar Recap: AI in Financial Reporting and Audit
Last month, my colleague Vanessa Teitelbaum, Senior Director of Professional Practice, led a conversation on how audit committee members and financial reporting professionals are integrating AI into their roles. The panel brought together practitioners across sectors to compare notes on governance frameworks, disclosure considerations, and the practical realities of deploying AI tools in a regulated environment. If you were unable to attend, the full recording is now available. It is worth your time, particularly for those thinking through how to have productive conversations about AI with audit committees and boards.
Dennis McGowan
Vice President, Professional Practice and Anti-Fraud Initiatives