Welcome back, Audit Insiders, to the first edition of 2026!
This year is already proving to be a transformative one; between a major leadership change at the PCAOB and a back-to-basics agenda from the SEC, there is much regulatory change to stay up to date on. In this edition, we explore these developments and provide links to some of our latest resources to help you stay ahead of emerging trends in fraud, digital assets, and the overall outlook for our profession.
Read on for what I’m tracking.
Please note that these perspectives are my own. If this email was forwarded to you, subscribe here so that you never miss a public company auditing update.
SEC Updates
On January 13, SEC Chairman Paul Atkins directed the Division of Corporation Finance to conduct a comprehensive review of Regulation S-K, the central repository for non-financial statement disclosure requirements. Chairman Atkins’ goal is to return to a principles-based approach, focusing on disclosures a “reasonable investor” considers important while avoiding an “avalanche of immaterial information” disclosure requirements.
At the 53rd Annual Securities Regulation Institute, Commissioner Mark Uyeda voiced strong support for the Reg S-K review, suggesting specific reforms to reduce the burden on smaller companies. He proposed adjusting the $120,000 de minimis threshold for related-party transactions under Item 404, which has not been updated in nearly two decades, and suggested revisiting the definitions for Emerging Growth Companies (EGCs) and Smaller Reporting Companies (SRCs) to ensure they remain relevant in the current economic environment.
The Commission is specifically looking for input on whether certain disclosures have become redundant or obsolete, and the public is encouraged to submit views by April 13, 2026. On February 13, 2026, James Maloney, Director, Division of Corporation Finance also asked for commenters to send in any feedback they have on Regulation S-X.
SEC Approves 2026 PCAOB Budget with Significant Cuts
On January 22, the SEC officially approved a $362.1 million budget for the PCAOB, representing a 9.4% decrease from the 2025 fiscal year. Chairman Atkins noted that this “leaner” budget is intended to demonstrate that fiscal discipline and regulatory effectiveness are not mutually exclusive. Notably, the budget includes a 52% reduction in the chairperson’s compensation and a 42% reduction for other board members.
The SEC Releases Joint Statement on Tokenized Securities
On January 28, the SEC’s Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a joint statement to provide much-needed clarity on the application of federal securities laws to tokenized securities. The guidance establishes a clear taxonomy: Category 1 involves securities tokenized by the issuer or its agents, while Category 2 involves securities tokenized by unaffiliated third parties without the issuer’s involvement. This distinction is critical for auditors and issuers alike as they navigate the registration and reporting requirements for on-chain assets.
PCAOB Updates
CAQ Welcomes New PCAOB Board Leadership
Following the appointment of new leadership at the PCAOB, the CAQ issued a statement congratulating the incoming Chair and Board Members. In our letter, we emphasized our continued commitment to engaging constructively with the Board to support a robust audit environment that serves the interests of the capital markets, while fostering innovation and audit quality within the profession. We look forward to working with the Board as they set out a strategic plan that aligns with the PCAOB’s statutory role and underpins their important oversight role.
PCAOB Announces 2026 Advisory Group Appointees
The PCAOB has announced its new appointments to the Investor Advisory Group (IAG) and the Standards and Emerging Issues Advisory Group (SEIAG). These members, who represent a diverse cross-section of the investment and audit communities, will provide vital input on the Board’s standard-setting agenda and emerging issues—such as the use of AI in audits.
Deterring and Detecting Fraud
SEC Charges ADM and Three Former Executives with Accounting and Disclosure Fraud
On January 27, the SEC filed settled charges against Archer-Daniels-Midland Company (ADM) and its former executives, Vince Macciocchi and Ray Young, and a litigated action against its former executive Vikram Luthar, for materially inflating the performance of a key ADM business segment, Nutrition, which ADM touted to investors as an important driver of the company’s overall growth. As a part of the settlement, ADM agreed to pay a $40 million civil penalty. This case demonstrates that the Commission is likely to continue to focus on traditional accounting and disclosure fraud, particularly where internal performance management and segment reporting materially affect information reported to investors.
The SEC’s order in this matter underscores the high value they place on proactive cooperation, crediting ADM’s internal investigation, voluntary self-reporting, and remedial enhancements in its decision to accept a settled resolution and shape the sanctions. This further reinforces the Enforcement Division’s longstanding policy that meaningful cooperation can influence both the decision to bring charges and the severity of penalties.
Anti-Fraud Collaboration Update
Fraud deterrence and detection take a proactive effort from all the stakeholders in the financial reporting ecosystem, and that is exactly why the Anti-Fraud Collaboration exists. See below for some key resources from the AFC.
Fraud Forum: Navigating a Dynamic Risk Environment
The AFC shared key takeaways from its latest Fraud Forum, which examined how rapid technological shifts and economic pressures are creating new opportunities for misconduct. While fraud risk continues to evolve, long established tools such as sound governance, risk management, and internal controls remain effective in providing strong safeguards against fraud. Audit committees, management, and both internal and external auditors have the foundational skills needed to continue to deter and detect fraud.
Cultivating a Questioning Mindset in 2026
In periods of uncertainty and change, the consistent application of professional skepticism remains a cornerstone of audit quality. As fraud risks evolve and financial reporting challenges grow more nuanced, it remains necessary for auditors to maintain a questioning mindset throughout all phases of the audit. The Role of the Auditor: Exercising and Maintaining Professional Skepticism, in collaboration with the AFC, explores the importance of cultivating a questioning mindset and attitude.
The Impact of a Changing Work Environment on Corporate Culture
In the last few years, remote and hybrid work models have changed the way employees interact. The Impact of a Changing Work Environment on Corporate Culture examines how a “decoupled” workforce impacts corporate culture and offers practical strategies for leadership to reinforce integrity, accountability, and the “speak-up” culture that is vital for fraud prevention.
Audit Quality
Audit quality in the U.S. remains strong, but with new technologies, evolving regulatory priorities, and shifting market risks, staying ahead requires continuous attention. The CAQ is actively engaging with stakeholders, providing resources, and leading conversations to help practitioners navigate these changes. Read on for recent news, tools, and upcoming events shaping the profession.
New Resource: Navigating the Technical Complexities Digital Assets
The digital asset ecosystem is developing rapidly, and we are increasingly seeing market participants, including public companies, engage with digital assets. In this quickly evolving ecosystem, trust is more important than ever, and auditors have a critical role to play. Our newest resource, The Role of the Auditor in Digital Assets: Present and Future, explores the current state of the digital asset ecosystem and explores how public company auditors are adapting to meet stakeholder needs. Beyond audits of the financial statements and ICFR, auditors are performing attestation engagements that can help enhance trust and provide increased transparency related to specific aspects of a company’s digital assets operation.
This is an evolving area, and the CAQ is working with auditors and other stakeholders to explore how audit and attestation services, those that can be provided today and that may be provided in the future, can meet stakeholder needs. The publication also includes a framework for boards, regulators, and policymakers helping to bridge the gap between operational risk and oversight.
CAQ Releases the 2026 Audit Profession Outlook
The last few years have brought transformational shifts to the public company audit profession. In A Post-Disruption Era: Trust, Transparency, and the Audit Profession, our CEO, Julie Bell Lindsay, explores where the profession will go next and provides a roadmap for the year ahead.
Read on for additional insights.
For this edition, we sat down with Natalie Deak Jaros, Americas Deputy Vice Chair – Assurance at EY, and Dipti Gulati, Audit & Assurance Chief Executive Officer at Deloitte, to discuss how their firms are navigating this landscape. From billion-dollar investments in talent to the integration of AI, they share insights on how the profession is strengthening the backbone of the capital markets.
Q: 2025 was defined by rapid technological change and shifting market dynamics. How has your organization adapted its approach to ensure sustainable audit quality during this period?
A: Through our audit transformation in 2025, we strengthened our teams, methods, and results. Our audit transformation reflects a deliberate, multi-year effort to achieve sustainable audit quality, including our $1 billion investment in talent and technology. – Natalie Deak Jaros
Q: While transformation is critical, the profession is also built on bedrock principles. Amidst these changes in the regulatory and technological landscape, how does Deloitte maintain its focus on the core elements of the audit?
A: Throughout 2025, Deloitte has remained committed to instilling trust and confidence in the capital markets. We are focused on providing high-quality audits rooted in the highest standards of ethics, integrity, independence, qualified teams, and innovative technology underpinned by our system of quality control. – Dipti Gulati
Q: Now, we’re in 2026, and the pace of innovation shows no signs of slowing down. How is EY planning to build on this year’s momentum, particularly regarding emerging technologies like Artificial Intelligence?
A: In 2026, we will continue to build on the success of our transformation and further integrate AI and advanced data analytics to better address risks and deliver actionable insights for our clients and stakeholders. – Natalie Deak Jaros
Q: The value of these advancements often gets discussed in technical terms, but the ultimate impact is on the investor. How do you view the broader purpose of the assurance you provide, and its role in the economy?
A: We empower investors with greater confidence in the financial information businesses share. Importantly, the assurance provided by our audits extends well beyond financial statements—it supports ongoing investment, protects retirement savings, and fosters the growth and stability of the broader economy. – Dipti Gulati
CAQ Panels at AAA
In January, my colleagues Vanessa Teitelbaum, Emily Lucas, and Erin Cromwell attended the American Accounting Association (AAA)’s 2026 Auditing Section Midyear Meeting where they moderated panels on the impact of AI on auditing, the use of AI by junior auditors, and how academic research can inform practice. As emerging technologies continue to change the way we work, engagement and education across stakeholder groups remain vital. We look forward to our continued engagement with academic stakeholders and AAA.
Upcoming Audit Committee Webinar
Join my colleague Vanessa Teitelbaum for a conversation on how audit committee members and those who work with and support audit committees use AI in their roles, and how that work has evolved with the increased integration of new technology. Engage with a panel of experts on March 26 at 1:00 pm and explore how the use of AI continues to impact the financial reporting ecosystem.
Dennis McGowan
Vice President, Professional Practice and Anti-Fraud Initiatives