Welcome back, Audit Insiders!
It’s hard to believe we are two months away from the end of the year! As you’ve probably noticed, the pace of regulatory and technological change across the profession certainly hasn’t slowed down. We are currently navigating a federal government shutdown while continuing to see key updates from the PCAOB and others.
Despite the challenges of the government shutdown, my colleagues and I remain focused on providing the clarity and technical perspective necessary to foster audit quality across the 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
SEC & Reporting: The Quarterly Debate
The conversation around the frequency of corporate financial reporting continues to be a central topic among U.S. policymakers. President Trump recently renewed his call for U.S. companies to report earnings semi-annually rather than quarterly. The SEC has since made this proposal a priority.
In a recent interview with NPR’s The Indicator from Planet Money, our CEO, Julie Bell Lindsay, stated that the issue boils down to what reporting investors want. Here at the CAQ, we are closely following the discussion.
Regulatory stability is crucial for sustained investor confidence. The current government shutdown has, unfortunately, introduced a layer of uncertainty. We’ll continue to monitor the situation as it develops.
PCAOB
PCAOB Publishes Staff Guidance on Audit Evidence
Earlier this month, the PCAOB published new staff guidance to assist auditors in implementing Paragraph .10A of AS 1105, Audit Evidence. This guidance provides illustrative examples and should be read in conjunction with the new requirements in AS 1105 and Board Policy statement on paragraph .10A. We welcome this guidance as a way the PCAOB can help audit firms as they prepare to apply the new requirements for evaluating the reliability of external electronic information provided by the company.
PCAOB Releases Data Points on Auditors of SPACs and Financial Restatements and Auditor Turnover
The PCAOB released a new edition of its Data Points series: Auditors of SPACs at IPO. The data, covering January 2015 through August 2025, shows that over 90% of SPAC IPOs were audited by firms outside the six largest global accounting firm networks.
The PCAOB also released an edition of its Data Points series on Financial Restatements and Auditor Turnover. The data, from 2005 to 2024, shows that Big R restatements (those disclosed in an SEC Form 8-K, Item 4.02.) occurred at a rate of approximately 3% per year. On average, just under 30% of these restatements followed an auditor change in the previous year.
SEC’s Draft Budget Proposal
Due to the government shutdown, we are currently awaiting an official announcement regarding the PCAOB’s draft budget proposal, which could include a suggestion for salary cuts for Board members. We will share an update once the PCAOB holds their open meeting to vote on their annual budget.
The Audit Effect: The Evolving Role of the Auditor
As investor demand evolves, so does the role of public company auditors. The CAQ is dedicated to providing resources to keep you up to date on trending topics in corporate reporting.
WSJ Feature: Auditing Crypto’s Blind Spots
The final article of our three-part series with the Wall Street Journal is a must-read! Auditing Crypto’s Blind Spots reinforces the auditor’s expanding role, moving the audit beyond the balance sheet into complex emerging areas like digital assets. While digital asset companies promise transparency through public ledgers, blockchain alone doesn’t equal complete financial transparency.
As part of the Audit Effect, the CAQ champions the value of independent assurance, demonstrating how auditors use professional skepticism and technical expertise to uncover critical risks, such as poor private key management practices, that can compromise customer assets. Read more to see how auditors are uniquely positioned to provide assurance over this emerging area.
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.
AFC Newsletter
The Anti-Fraud Collaboration has released its latest quarterly newsletter, sharing recent resources and offering insights into emerging fraud risks. Read the latest issue here and visit the Anti-Fraud Collaboration website to subscribe for future updates.
The Role of the Auditor in AI: Present and Future
As companies integrate AI into their workstreams, investors understandably have concerns over the usage of this advanced tool.
Our newest publication explores how auditors are uniquely positioned to bring trust and transparency to the use of AI at public companies. For companies to gain the full benefit from their AI investments, trust is a critical factor. This is because internal and external stakeholders need assurance; they must have confidence in the reliability, transparency, security, and integrity of those AI systems before they rely on them.
Auditors apply their existing expertise to provide assurance services that help meet this growing need, effectively maximizing the benefits and realizing the potential of these crucial investments.
In an Audit in Action blog, my colleague, Erin Cromwell, Senior Manager of Professional Practice, spotlights how auditors are more than prepared to implement essential oversight. Read on for Erin’s takeaways and her perspective on the challenges associated with AI and how management can play a role in enhancing investors’ confidence.
Explore Our Updated External Auditor Assessment Tool
Earlier this month, the CAQ released our updated External Auditor Assessment Tool. This unique resource is designed to guide audit committees in assessing the qualifications and performance of their external auditor. Audit committees have the direct responsibility to oversee the external auditor and should perform this evaluation regularly (at least annually) to make an informed recommendation to the board regarding retention. The assessment questionnaire focuses on four key areas: the quality and sufficiency of resources provided by the engagement team; the quality and sufficiency of resources provided by the audit firm as a whole; the quality of communication and interaction; and the vital assessment of auditor independence, objectivity, and professional skepticism.
The CAQ is committed to providing tools that facilitate this robust, two-way dialogue between the committee and the external auditor. We’ll continue to share resources as they are developed.
Spotlight on Cybersecurity Assurance
This month, I sat down with Todd Bialick, PwC US Digital Assurance and Transparency Leader, to discuss the rising need for auditor expertise in evaluating cybersecurity information. Read on for Todd’s takeaways.
How does auditor expertise and rigor make the profession uniquely qualified to assure cybersecurity information as investor demand increases?
The long-standing foundation of independence, accountability, and professional rigor that auditors apply to financial reporting can now support their work relating to cybersecurity information. By applying proven principles of independence, accountability, and transparency, auditors can help companies bring credibility to the cybersecurity information they provide, so investors can move forward with confidence.
In an evolving digital world, how do you think the role of the auditor has changed?
As companies embrace cloud, automation, and AI, the risk landscape has shifted dramatically. Cyber threats can pose increasing risks to business performance and market confidence. In light of the growing complexity of digital threats, auditors have continued to proactively refine their approaches to respond to these risks with a particular focus on the impact on financial reporting and disclosures, including Internal Control over Financial Reporting (ICFR).
In your opinion, what is the advantage of having a multidisciplinary expertise?
The world is changing, and the financial reporting profession is being asked to go beyond our traditional field of expertise. In response, audit firms are bringing together professionals with deep knowledge of financial reporting and operational controls, along with cybersecurity specialists who understand threat landscapes and risk management. This collaboration can enable a comprehensive approach to planning and delivering audit and attest engagements.
How do CPAs maintain independence and professional rigor when evaluating cybersecurity information?
As we both know, CPAs operate with independence and adhere to strict professional standards. Their evidence-based approach, grounded in objectivity and professional skepticism, equips them to evaluate cybersecurity information and management’s processes and controls. Through this approach, stakeholders and investors can be assured that the information provided is reliable and accurate.
CAQ at the Axios BFD Summit
Our CEO, Julie Bell Lindsay, will be a part of the upcoming Axios Summit on Tuesday, November 18, in New York City. The summit will spotlight the power players behind the year’s biggest deals in tech, finance, and M&A. The conversations, led by Axios business editor Dan Primack, focus on the strategies shaping valuations and the future of dealmaking. Stay tuned for our takeaways!
Register for the External Auditor Assessment Tool Webinar
Join us on November 20th for this virtual webinar, in partnership with the National Association of Corporate Directors (NACD). My colleague, Vanessa Teitelbaum, Senior Director, Professional Practice will moderate a discussion with Mike Seelig and Stephen Parker. The event will focus on the updated External Auditor Assessment Tool, which is used by audit committees to fulfill their duty of evaluating the external auditor’s qualifications and performance. I hope to see you there! Register here.
Dennis McGowan
Vice President, Professional Practice and Anti-Fraud Initiatives