Audit Insider | October 2026

On the regulatory front this month, the PCAOB released updated agendas shaped by public comments, and the CAQ weighed in with the SEC on the QC 1000 amendments and its proposed framework for crypto assets. The AICPA released new guidance on AI in the audit, and the Anti-Fraud Collaboration updated its Oteal Pharmaceuticals case study ahead of our Fraud Forum in November.

Read on for what I’m tracking.

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The CAQ Supports SEC Approval of the QC 1000 Amendments

Last month I shared that the PCAOB adopted targeted amendments to QC 1000, A Firm’s System of Quality Control. This month, the CAQ submitted a comment letter supporting SEC approval, noting that the amendments address implementation challenges and bring QC 1000 into closer alignment with other quality management frameworks. Looking ahead to the December 15 effective date, we also encouraged continued PCAOB engagement on implementation, building on the staff’s QC 1000 Questions and Answers, which is well worth a read if your firm hasn’t worked through it yet.

The CAQ Comments on the SEC’s Proposed Regulation Crypto Assets

On October 20, the CAQ submitted a comment letter on the SEC’s proposed Regulation Crypto Assets, focused on the areas that affect auditors. We supported the proposal’s flexibility to permit audits under either U.S. GAAS or PCAOB standards and recommended that unaudited semiannual financial statements clearly say so to avoid an expectation gap. Because these entities would be issuers of crypto assets, we also encouraged the SEC, FASB, PCAOB, and AICPA to coordinate on the new accounting and auditing questions likely to arise.

Read the comment letter here.

PCAOB Updates its Standard-Setting, Research, and Rulemaking Agendas

On September 30, the PCAOB updated its standard-setting, research, and rulemaking agendas, the first time the Board sought public comment to inform them. The CAQ previously submitted a comment letter on the proposed agenda back in August. The standard-setting agenda projects cover negative assurance in comfort letter engagements, auditor independence, fraud, noncompliance with laws and regulations, and going concern. The research agenda includes data and technology, firm and engagement performance metrics, and communications with audit committees, alongside a rulemaking project on a permanent broker-dealer inspection program.  The PCAOB also added a section highlighting activities supporting standard setting and research, including development of a conceptual framework for standard setting, a post-implementation review of critical audit matters, and consideration of staff guidance on super intelligence, digital assets, and accumulating identified misstatements.

PCAOB Posts New Inspection Modernization Council Materials

The PCAOB recently posted new materials from its Inspection Modernization Council (IMC) that provide additional insight into potential approaches to modernizing the inspection program. The October materials address a proposed QC-informed inspection approach for a 2027 pilot, potential severity scales for engagement and quality control findings, the evaluation and reporting of QC findings, and alternative approaches to inspection reporting. The materials are for discussion purposes and have not been approved or adopted by the Board. View the materials here.

PCAOB Investor Advisory Group Meeting Highlights Inspection Modernization, CAMs

The PCAOB’s Investor Advisory Group met this month to discuss several topics affecting investors and the audit profession, including the Board’s inspections modernization efforts and the usefulness of critical audit matters (CAMs). The discussion offered insight into how investors are thinking about audit transparency and the information they find most valuable in today’s reporting environment.

Standards and Emerging Issues Advisory Group to Discuss Standard Setting Priorities

On October 30, the PCAOB’s Standards and Emerging Issues Advisory Group will convene to provide input on the Board’s standard-setting activities and inspections modernization efforts. The advisory group brings together market participants and other stakeholders to offer perspectives on emerging issues affecting auditing and investor protection.

PCAOB Reports Continued Improvement in Audit Quality Across Inspected Firms

The PCAOB released a new staff Spotlight highlighting results from its 2025 inspections of public company audits, which showed continued improvement in audit quality across many firm categories. The overall Part I.A deficiency rate declined to 23% in 2025 from 38% in 2024, with notable improvements among Big Four firms, global network firms, and annually inspected non-affiliated firms. The report also outlines how the PCAOB is using insights from inspections to inform its modernization efforts and better understand the drivers of audit quality.

Introducing the CAQ’s New CEO

The CAQ recently welcomed Dave Sullivan as our new Chief Executive Officer. Dave brings decades of leadership experience and a deep commitment to audit quality, investor protection, and strong capital markets. He joins the organization at a time of significant change for the profession, with emerging technologies, evolving stakeholder expectations, and new reporting demands reshaping the audit landscape.

I’m excited about the perspective and energy Dave brings to the role and look forward to partnering with him as we continue supporting auditors and building trust in capital markets. You can read more about Dave’s appointment in the full press release here.

The CAQ Heads to Axios BFD

The CAQ is heading to New York City for Axios BFD on November 17! Led by Axios business editor Dan Primack, the annual summit spotlights the leaders behind the year’s biggest deals and the strategies shaping dealmaking across finance and technology. If you are attending, we look forward to seeing you at the event!

The Audit Effect: The Evolving Role of the Auditor

How Investors Rely on Auditors

What factors ultimately shape investor confidence as they decide where to deploy capital? In our conversation, investors shared why they need reliable information to decide their investment strategy. As we know firsthand, auditors strengthen trust in that information by applying rigor and skepticism to companies’ financial reporting, giving investors greater confidence to make decisions that keep markets moving. Without that trust, there would be less confidence and more friction.

As the corporate reporting landscape evolves, independent assurance will remain essential to investor confidence. Watch the video and unpack the investors’ perspective.

Upskilling Auditors for Evolving Investor Needs

In our latest Audit in Action blog, Susan Klink, Chief People Officer at Deloitte & Touche LLP, shares how Deloitte is preparing auditors for evolving investor expectations. To every engagement leader, Susan stressed that (and I concur) the goal “isn’t simply to teach auditors how to use new technology, but to help them combine technology with industry knowledge, professional skepticism, judgment, and a commitment to quality.”

I encourage you to explore our insightful conversation and share how your firm is working to meet this new demand.

SEC Material Matters: Back to Basics in Enforcement

The latest episode of the SEC’s Material Matters podcast features a conversation between Paul Atkins, Chairman of the SEC, and David Woodcock, Director of the Division of Enforcement, on the agency’s enforcement priorities. The discussion covers the SEC’s focus on fraud and investor harm, emerging risks involving crypto assets and AI-enabled scams, and how the Division is using technology to strengthen its enforcement efforts. Listen to the episode here.

Tech Corner

AICPA Issues Practice Aid on AI and the Financial Statement Audit

On October 13, the AICPA released Artificial Intelligence (AI) Considerations for Financial Statement Auditors, which addresses how a company’s use of AI in financial reporting affects the audit and how a firm’s own use of AI tools bears on quality management, supervision and review, and professional skepticism. As Jennifer Burns, Chief Auditor at the AICPA, put it, “Ultimately, the auditor remains responsible for the audit and the audit opinion.”

AICPA and AIUC Launch Joint Assurance Offering for AI Systems and Agents

On October 19, the AICPA and the Artificial Intelligence Underwriting Company (AIUC) announced a joint offering that pairs a SOC 2 report with an AIUC-1 certification in a single CPA-led engagement, adding live testing of how AI agents behave across hundreds of risk and attack scenarios. Several CPA firms are already delivering it, with a full launch expected in early 2027.

Fighting Fraud

The Anti-Fraud Collaboration Releases Its Updated Oteal Pharmaceuticals Case Study

The Anti-Fraud Collaboration released the October 2026 edition of its Oteal Pharmaceuticals case study, which brings generative AI into the fact pattern. Days before a filing deadline, the fictional company’s new Chief Accounting Officer learns that its GenAI tool, piloted without a formal governance framework, has surfaced possible side terms with a distributor. As the external audit partner in the case reminds everyone, the use of GenAI “does not reduce the need for sufficient appropriate audit evidence.” With International Fraud Awareness Week happening from November 15 to 21, this is a great opportunity for your team to sharpen their anti-fraud skills.