Welcome back, Audit Insiders! With summer in full swing, I hope you’re staying cool and enjoying some vacation time. For us in the accounting and auditing profession, it certainly has been a busy summer, full of updates from regulators and standard-setters.
Here in Washington, D.C., the SEC has hosted an investor advisory meeting, while the PCAOB has been holding workshops for smaller firms. At the CAQ, my colleagues have been just as busy, convening stakeholders, launching new publications, and attending the 36th ACFE Global Fraud Conference. Can you believe we are officially halfway through 2025?
Read on for the latest issues I’m tracking and resources from the profession to assist audit practitioners.
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
SEC Solicits Public Comment on the Foreign Private Issuer Definition
On June 4, the SEC published a concept release soliciting public comment on the definition of a foreign private issuer. Currently, foreign private issuers benefit from certain accommodations and exemptions from the disclosure and filing requirements of the federal securities laws. The concept release solicits public input on whether the definition of foreign private issuer should be revised in light of significant changes in the population of foreign private issuers since 2003. The public comment period will remain open for 90 days following publication of the comment request in the Federal Register.
SEC Hosts Investor Advisory Committee
On June 5, the SEC held an Investor Advisory Committee meeting. The event included two panel discussions, “Engaging with Beneficial Owners: Exploring Pass-Through Voting and Other Means of Reaching the Ultimate Beneficial Owner,” and “Beyond the GAAP: Market Perspectives on Non-GAAP Financial Disclosures.”
Our own Vanessa Teitelbaum, Senior Director of Professional Practice, participated in the Beyond the GAAP panel, sharing her insights on how non-GAAP measures could be strengthened. The committee also discussed recommendations regarding the use of mandatory arbitration clauses by registered investment advisers. Watch the recordings here.
PCAOB
ICYMI: This week the PCAOB announced that Chair Williams will resign her position effective July 22.
On July 15, Chair Erica Williams announced her resignation as the head of the PCAOB. Learn more about this announcement here.
Chair Williams announced the Smaller Firm Resource Group at the PCAOB SEIAG Meeting
On May 22, the PCAOB held a meeting of its Standards and Emerging Issues Advisory Group (SEIAG). During the meeting, Chair Williams shared that the PCAOB will be creating a resource group for smaller firms, comprised of smaller firm representatives to advise PCAOB staff. The meeting also included a standard-setting update, emerging issues breakout sessions, discussions on the implementation of new and amended standards, the importance of firm culture, and more. Watch the recording here.
PCAOB Publishes Annual Report on Broker-Dealer Audits
On June 13, the PCAOB published its annual report on audit broker-dealers. As required by law, the PCAOB has the responsibility to oversee firms that audit broker-dealers registered with the SEC.
PCAOB Hosts QC Smaller Firm Workshop
On June 17, the PCAOB hosted a second in-person workshop designed to assist smaller audit firms with the practical implementation of QC 1000, A Firm’s System of Quality Control. The event was held at the Westin Irving Convention Center in Irving, Texas, and provided attendees opportunities to engage directly with PCAOB staff ahead of the December 15, 2025, effective date.
PCAOB to Host Virtual Workshops to Assist Smaller Firms with Implementation of New Quality Control Standard
The PCAOB will host two virtual workshops designed to assist smaller audit firms with the practical implementation of QC 1000, A Firm’s System of Quality Control. The events will be held on July 17 and July 31 from 11:00-2:30 p.m. EST. The events are free. You can register for the webcasts on the PCAOB’s website.
New PCAOB Resource, Audit Focus: Engagement Acceptance
On July 7, the PCAOB released a staff publication, Audit Focus: Engagement Acceptance. This publication includes reminders for auditors who audit smaller public companies of PCAOB requirements related to engagement acceptance for initial engagements for new client. The resource also includes good practices that the PCAOB staff has observed.
Deterring and Detecting Fraud
To elevate the profession’s understanding of fraud and the vital role that auditors play in this landscape, the CAQ collaborates with the Anti-Fraud Collaboration (AFC) to produce insights and actionable recommendations to strengthen the profession against fraud risk.
The AFC Releases Report on SEC and PCAOB Enforcement Trends
The Anti-Fraud Collaboration (AFC)’s new report, in collaboration with the CAQ, analyzes more than 400 SEC and PCAOB enforcement actions from 2021–2024.
Analyzing matters that have been the subject of enforcement actions can serve as a helpful indicator for what future enforcement priorities might look like. The report identified four main enforcement trends and regulatory insights, including:
- Revenue recognition remains a top regulatory focus due to its importance to investors and vulnerability to fraud.
- Post-M&A accounting issues have led to more PCAOB enforcement actions, while SEC actions have declined in this area.
- Auditors face rising penalties, with both the PCAOB and SEC imposing significant fines in cases involving integrity violations.
- Regulators are using sweeps to target compliance issues, including audit committee communications and inadequate disclosures.
Read on for more takeaways.
AFC Hosts Workshop at the ACFE’s Global Fraud Conference
In June, at the 36th Global Fraud Conference in Nashville, I joined my colleagues at the AFC and ACFE for a multi-stakeholder executive workshop exploring the pervasiveness and impact of fraud at U.S. public companies.
The workshop brought together voices from across the financial reporting ecosystem, including external and internal auditors, financial executives, audit committees, and anti-fraud professionals. We discussed fraud prevalence and losses, contributing risk factors, and the most effective opportunities to enhance fraud deterrence and detection across public companies. As the fraud risk landscape evolves, the CAQ, as a member of the AFC, will continue to collaborate with our colleagues across the profession to share resources and best practices. I encourage you to follow the AFC on X and LinkedIn for the latest updates.
Audit Quality
Audit quality in the U.S. remains high, but in light of economic uncertainty, emerging developments, and demands on talent, audit practitioners should stay vigilant of the latest developments impacting audit quality. Read on for recent news, tools, and resources.
CAQ Releases the Spring 2025 Audit Partner Pulse Survey
2025 has been marked by economic volatility, technological advancement, and workforce challenges. To assess how audit partners at leading firms assess our economic landscape, the CAQ released our latest Audit Partner Pulse Survey in June. Audit partners continue to emphasize strong financial performance, smart growth strategies, and careful cost management as top areas of focus for the year ahead. In a more volatile and unpredictable environment, doubling down on fundamentals could be the key to helping businesses weather whatever comes next. Explore additional insights here.
CAQ Releases New Investor Survey with Focus on GenAI
As the technological landscape continues to evolve, organizations are increasingly looking at ways to integrate generative Artificial Intelligence (GenAI) into their workstreams. In our latest Institutional Investor Survey, nearly all surveyed respondents trust the use of AI to support the audit processes and say the use of AI increases trust in the audit of public companies. GenAI will continue to be at the forefront of changes in the coming years, but despite it all, the human element remains the most critical. Here at the CAQ, we have previously produced resources for auditors and audit committees to better elevate their understanding of GenAI and what it means for the profession.
S&P 500 Sustainability Reporting and Assurance Analysis
Sustainability reporting continues to be an essential aspect of corporate transparency and investor decision-making, as understanding current market practices is essential for all stakeholders. Our analysis of S&P 500 sustainability assurance trends for the 2023 period reveals significant growth in third-party assurance over sustainability information, with nearly three-quarters of reporting companies now seeking independent verification of their environmental and social disclosures. The comprehensive report examines trends in reporting standards, assurance practices, and compliance with emerging regulations, providing valuable benchmarking insights for the evolving landscape of corporate sustainability accountability. Learn more here.
CAQ Hosts Inaugural PPEC Summit
Last month, we convened thought leaders from across the profession for the first-ever Professional Practice Executive Committee Summit (PPEC)—a full day of dialogue focused on the most pressing issues shaping the future of the field.
The Summit brought together a diverse group of professionals, including national office leaders and subject-matter experts from our member firms for keynote remarks, panel discussions, and open forums. Innovation expert Josh Linkner kicked off the day with a keynote on driving change and unlocking the power of innovation through small actions and everyday creativity. Throughout the event, leaders from our member firms led conversations on timely topics including the regulatory landscape, talent pipeline, fraud, audit innovation, and the evolving value of assurance.
As the profession continues to navigate change, the PPEC remains committed to fostering collaboration and advancing dialogue on the issues that matter most.
Question: In June we celebrated Pride Month, a time when we recognize the influence of LGBTQ+ people around the world. How has being a gay professional influenced your career journey and what challenges have you encountered along the way?
I came out when I was 31 years old, which was almost 10 years into my career as an auditor. I grew up in a large Catholic family living in the Philadelphia area. At the time I was growing up, I didn’t have gay adults to look up to as role models. Although my family embraced and supported me when I came out, they also didn’t have a lot of exposure to the LGBTQ+ community when I was growing up. After college I decided to focus on my career and used that as an excuse to avoid my personal life. Work was demanding. I had to travel for client engagements. Meetings, meetings, meetings. And then something interesting happened. I had the opportunity to move to a new city for one of my clients, a new city where I knew nobody. The move to a new city both opened a professional door for me and forced me to reflect on my life beyond work. Many people have coming out stories filled with appreciation for their friends and family support. I have those stories too, but I have the joy of adding my employer to the mix of reasons to be thankful for in my own coming out journey.
Question: How have you seen the work environment change over time for LGBTQ+ professionals?
My experience coming out at work was both scary and uplifting. My firm had inclusive policies for LGBTQ+ employees, but I wasn’t aware of any openly LGBTQ+ partners. That’s not to say they weren’t there; I just didn’t know them. I think that lack of visibility contributed to my inability to picture myself out of the closet. When I did come out, the reception from my colleagues was incredible. They didn’t just accept me; they were excited for me. I now know a lot more leaders in the profession who are gay and wish that younger me had seen that sooner. I am proud to work in a profession that is inclusive. Question: Can you share your perspective on the importance of LGBTQ+ representation in the audit profession?
For the last several years I have served on the Board of Annapolis Pride, an organization dedicated to advocating, empowering, and celebrating the LGBTQ+ community in Annapolis, Maryland. Annapolis Pride plans the annual Parade and Festival in Annapolis each year, an event that celebrates the LGBTQ+ community, but more importantly brings visibility to all members of our queer community. It’s important for me to volunteer my time and money to Annapolis Pride so I can do my part and be the adult that young me needed but didn’t see. I feel very passionate about the importance of LGBTQ+ representation and visibility in all facets of our lives, including the audit profession. According to the Trevor Project’s 2024 U.S. National Survey on the Mental Health of LGBTQ+ Young People, 39% of LGBTQ+ young people seriously considered attempting suicide in the past year, including 46% of transgender nonbinary young people. The same survey found that LGBTQ+ young people who live in accepting communities attempted suicide at less than half the rate of those who reported in living in very unaccepting communities. Fostering accepting communities can save lives, and I’m proud of the work this profession does to be welcoming.
Dennis McGowan
Vice President, Professional Practice and Anti-Fraud Initiatives