Welcome back, Audit Insiders!
It’s hard to believe we are closing in on the end of summer, but the last month has been plenty busy here at the CAQ.
It’s hard to believe we’re about to head into Q4 and say goodbye to the last days of summer. As we welcome cooler temperatures, September has also brought plenty of updates in public company auditing, crypto, artificial intelligence, and the accounting pipeline.
Here at the CAQ, my colleagues and I have stayed active, submitting comment letters to the SEC, spotlighting the value of oversight in the Wall Street Journal, and prepping for key conversations at the upcoming NACD annual summit.
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 Announces New Crypto Roundtables and AI Task Force
The SEC announced that its Crypto Task Force will host a series of roundtables across the country to provide opportunities for additional stakeholders to meet with Commissioner Hester Peirce, who leads the Crypto Task Force. Commissioner Peirce and members of the Crypto Task Force will visit cities across the United States, and they are particularly interested in hearing from representatives of crypto-related projects that have 10 or fewer employees and are less than two years old.
Along with the crypto roundtables, the SEC also announced the launch of a task force on artificial intelligence (AI) that will spearhead the agency’s efforts to enhance innovation and efficiency in its operations through the responsible use of AI. The SEC’s AI Task Force will centralize the agency’s efforts and enable internal cross-agency and cross-disciplinary collaboration to navigate the AI lifecycle, remove barriers to progress, focus on AI applications that maximize benefits, and maintain governance. The task force will support innovation from the SEC’s divisions and offices and facilitate responsible AI integration across the agency.
The SEC Launches ‘Project Crypto’
In August, SEC Chairman Paul Atkins delivered remarks on the SEC’s new initiative, Project Crypto. The initiative is created to help support President Trump’s goal of making the country the “crypto capital of the world.” The CAQ will continue to monitor and share resources as the crypto landscape evolves. Learn more here.
PCAOB
PCAOB Posts Board Policy Statement on Evaluating the Reliability of External Electronic Information Provided by the Company
On September 18, 2025, the PCAOB issued a policy statement to guide implementation of paragraph .10A of AS 1105, Audit Evidence, which takes effect for audits of fiscal years beginning on or after December 15, 2025. The statement emphasizes that the standard is principles-based and scalable. It also states, “If, based on these factors, the auditor concludes that there is no more than a remote possibility that the information used as audit evidence has been modified in a way that would render it unreliable for purposes of the audit, the PCAOB will not, through its inspection or enforcement processes, treat the absence of any separate testing specified in paragraph .10A(b) as noncompliance with PCAOB auditing standards.” The statement also communicated that further implementation guidance and illustrative examples will be issued by the Office of the Chief Auditor.
PCAOB Postpones Effective Date of QC 1000 and Related Standards, Rules, and Forms
The PCAOB announced that it is postponing the effective date for QC 1000, A Firm’s System of Quality Control, and other new and amended PCAOB standards, rules, and forms adopted by the Board for one year, to December 15, 2026. The Board’s action also postpones the related rescission date of certain rules and standards that are currently in force. The CAQ submitted a comment letter to the SEC that was supportive of the deferral and encourages the SEC and PCAOB to gather information on certain topics which represent implementation challenges for some firms to determine whether targeted amendments would be appropriate to enhance scalability of the standard and address unintended consequences.
PCAOB Releases Technology Innovation Alliance Working Group Study and Recommendations for Audit Technology Advancements
As the use of technology and innovation in corporate reporting and the audit continues to evolve, the PCAOB recently released the findings from the Technology Innovation Alliance (TIA) working group’s 2023 study on the use of emerging technologies and their potential impact on audit quality and the 2024 recommendations on how the PCAOB’s oversight programs could address the use of emerging technologies.
The study provides an overview of the current state of technology in auditing and financial reporting, and the related report recommends that the PCAOB consider four areas of action to promote the adoption of technology to improve the quality of public company audits.
PCAOB Launches Smaller Firm Resource Group
The PCAOB announced the launch of the Smaller Firm Resource Group, an advisory group of professionals from smaller audit firms. The Smaller Firm Resource Group will advise PCAOB staff on:
- Auditing and related professional practice standards
- Inspections and related activities
- Economic considerations, including but not limited to costs and benefits of PCAOB programs, and their impact on audit quality among smaller firms.
PCAOB Shares Resource for Broker-Dealer Auditors
The PCAOB released its new resource for broker-dealer auditors. The Broker-Dealer Audit Focus Series aims to provide easy and digestible information to auditors of registered brokers and dealers. Each edition will focus on a particular topic, and the latest edition spotlights exemption reports.
Deterring and Detecting Fraud
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.
Register for AFC’s Upcoming Webcast on Fraud
On October 30, join the Anti-Fraud Collaboration (AFC) for a webcast to explore the pervasiveness and impact of fraud at U.S. public companies. A panel of multi-stakeholder experts will discuss findings from a joint survey from ACFE-AFC’s The Impact of Fraud at U.S. Public Companies, and the CAQ’s 2025 Institutional Investor Survey, and provide insights into the current level of fraud and fraud losses experienced by U.S. public companies, factors that contribute to and can mitigate the most prevalent fraud risks faced by companies in the current environment, identifying and assessing the likelihood and significance/magnitude of those factors, and areas of focus for enhancing the effectiveness of fraud deterrence and detection.
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.
CAQ Represented at Axios’ AI+ Summit
Our CEO, Julie Bell Lindsay, joined government, tech, and finance leaders at the Axios AI+ Summit in Washington, D.C., where she discussed how assurance can help bridge the trust gap in a rapidly changing AI landscape.
In her conversation, Julie spotlighted how the audit profession can enhance trust in AI technologies. Here at the CAQ, we know that auditors are uniquely positioned to provide independent assurance over emerging areas, and AI is no exception. This is the Audit Effect.
Learn more about the Summit.
Explore the August Public Policy and Technical Alert
August was a busy month for standard setters and regulators. Don’t miss out on important updates from the SEC, PCAOB, FASB, and other regulating bodies. Check out the August edition of the Public Policy and Technical Alert today.
The Accounting Pipeline: The Latest Findings
Here at the CAQ, we have been tackling one of the profession’s most pressing challenges: building the next generation of accountants as record numbers of CPAs approach retirement. Since 2021, as part of our Accounting+ initiative, we have been working to understand student perceptions of accounting and their respective career priorities.
To expand this impact, CAQ partnered with EVERFI to launch a digital course that introduces high school students to accounting pathways. In the 2024–2025 school year alone, the course reached over 96,000 students across nearly 4,000 schools, providing valuable insights into how student perceptions shift with exposure. Our newest report, Career Interest and Perceived Value of Accounting, found that students who learn about accounting before making higher education choices are more likely to see the profession as a viable and rewarding path.
My colleague, Liz Barentzen, Vice President of Operations and Talent Initiatives, unpacks what this means for the future of the profession with Audit In Action.
One thing is certain: the CAQ will continue to work to reach students where they are and help showcase the endless possibilities of an accounting career.
ICYMI: Check Out Our Wall Street Journal Feature
The second article of our three-part series with the Wall Street Journal spotlights how auditors are responding to generative AI in an ever-changing landscape. As GenAI rapidly reshapes the financial reporting profession, “How Auditors Maintain Trust in Financial Reporting in the Age of AI” explores how independent auditors apply their expertise to help ensure AI is adopted in a responsible, reliable, and transparent way. Read more to see how the profession applies these principles in practice, regardless of changing circumstances.
CAQ Submits Comment Letter to the SEC
In September, the CAQ submitted our comment letter to the SEC on the Concept Release on Foreign Private Issuer Eligibility; File Number S7-2025-01. In our letter, we outlined our support for the Commission’s efforts to consider whether the current Foreign Private Issuer (FPI) definition should be revised and recommended that the Commission consider:
- The impact of changes to the FPI definition on the financial reporting ecosystem outside the United States;
- Refining the eligibility criteria for the use of International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB) for dual-listed registrants that are incorporated outside the United States;
- Providing transition provisions that provide enough time and flexibility to enable preparers to build the appropriate processes, systems and controls to report high-quality financial information to investors in the shorter domestic registrant timelines;
- Extending Smaller Reporting Company (SRC) accommodations to FPIs;
- Aligning the Foreign Business definition with the current definition of an FPI, and
- Modifying current FPI accommodations.
CAQ’s Vanessa Teitelbaum Talks PCAOB Inspections
In a changing regulatory environment, audit committees can sharpen their oversight by using PCAOB inspection report findings to engage external auditors in meaningful dialogue about audit quality, risks, and improvement. However, what are the top questions audit committees should ask?
In a blog for the National Association of Corporate Directors, my colleague, Vanessa Teitelbaum, Senior Director of Professional Practice, shares her insights and recommendations for audit committees when it comes to PCAOB inspections and the role of the external auditor. Take a look.
Spotlight: Brian Fields on How AI is Driving the Audit
In each edition, we feature leaders in the audit profession. This month, we’re spotlighting Brian Fields, Audit Transformation Leader at KPMG. Read on for Brian’s insightful perspectives on AI and the audit. Thank you Brian!
Q: Where do you see the biggest opportunity for AI to enhance audit quality?
As companies increasingly adopt AI technologies, they encounter new opportunities, risks and challenges. Finance leaders are addressing these risks by becoming AI-ready and expect their external auditors to incorporate these capabilities in audits while using professional judgment to evaluate their own uses. Our AI in Finance report shows that 83% of financial reporting leaders expect auditors to use AI for risk prioritization, anomaly detection and real-time analysis. Through our Trusted AI framework and global smart audit platform, KPMG Clara, we’re embedding AI at scale to deliver deeper insights, strengthen trust and raise the bar on audit quality.
At KPMG we use a variety of capabilities to improve audit quality, including using AI to score entire data sets as opposed to performing sampling, but also to evaluate financial statements for compliance with GAAP, perform routine procedures and as a quality coach in preparing documentation. So it’s hard to identify a single opportunity as the biggest because we see AI supporting all aspects of a data-driven audit, from data extraction to performance of procedures and quality control. The big opportunity is to reimagine the entire chain of work for a world of artificial reasoning on demand.
Q: How do you see clients navigating the balance between wanting to innovate quickly with AI and ensuring they have proper controls and governance in place?
Rapid AI adoption demands strong governance. Our AI in Finance report shows that finance leaders expect auditors to be AI-ready—balancing innovation with control. Through our Trusted AI framework and suite of AI Assurance services, we help clients deploy GenAI responsibly, with confidence that their systems are secure, compliant and ethically sound.
The goal is to help clients move fast with guardrails. For instance, a company might start by triaging AI use cases through our Trusted AI framework, aligning innovation sprints to a risk-based set of controls mapped to leading standards and emerging regulations. This makes it clear which experiments can proceed quickly and which require heightened governance. From there, we can help clients with governance: policies and procedures supported by practical artifacts like an AI inventory and system cards so leaders always know where AI is running, on what data and with what risks.
Assurance is built into the lifecycle—not bolted-on at the end. The result is a pragmatic “build fast, prove trust” approach: accelerate value where risk is low, and apply deeper assurance where it counts—so innovation and governance move together.
Q: How can obtaining AI assurance enable companies to innovate more boldly with AI technologies?
Strong AI assurance and audit practices empower companies to innovate boldly and responsibly. Just as Sarbanes-Oxley elevated trust in financial reporting, today’s AI governance—anchored by our Trusted AI framework—helps organizations scale AI with confidence.
These capabilities help organizations build confidence in their AI systems by evaluating whether the right governance, processes and controls are in place, especially when those systems affect business decisions, compliance or financial reporting. This helps accelerate adoption of AI by identifying risks before they become problems, provide confidence to boards, investors and regulators that AI systems are accountable and explainable, and support audit committees and internal control frameworks as AI intersects with SOX or financial reporting processes.
Q: As AI becomes more prevalent in financial reporting and business operations, how do you see the auditor’s role evolving in providing assurance that investors and regulators can trust?
As AI becomes embedded in financial reporting and operations, auditors play a critical role in assuring systems are governed responsibly. Companies must implement AI governance to understand where and how decisions are made, whether the data used to make those decisions is relevant and reliable and prevent unauthorized access. This requires comprehensive frameworks. Third-party assurance professionals who understand the intersection of technology integration and internal controls can help companies better manage this myriad of challenges.
Our Trusted AI framework guides how we help clients manage AI risks—from third-party models to data integrity—while our AI Assurance services prepare them for compliance and build trust with investors and regulators.
For example, before scaling an agentic system we may recommend targeted diagnostics and, when needed, provide independent testing and attestation (e.g., SOC 2) so executives and boards get objective confidence in their controls. And for AI that could affect financial reporting, we offer RealTime Systems Assessments to evaluate changes that may impact ICFR. Post-deployment, we’ll want to see monitoring controls in place to make sure systems are still performing as intended. Depending on the complexity and risk of the system, we may recommend algorithmic monitoring for drift, quality and incidents—with human-in-the-loop safeguards—to ensure ongoing trust.
Q: Looking ahead, what’s one area where you think AI will have the most transformative impact on how audits are conducted, and how are you preparing for that shift?
In a world of pervasive AI agents moving at warp speed, the role of the auditor will be more important than ever. Auditors will need to deploy all the capabilities at their disposal, including AI, to manage the risks of an AI world. But paradoxically, in a world of machines, I believe the human auditor becomes even more important as orchestrator, overseer and communicator. And this is where I think the most transformative impact will be—that the role of the human auditor will change. That’s exciting for auditors and probably a little daunting for most of us too.
Preparing for that future requires a multi-dimensional approach—it has implications for talent acquisition, training, performance development, resource management, mentorship and culture. I won’t dive into each of those elements here but instead leave you with this—I believe firms that most effectively harness the power of their people will be best positioned. So at KPMG we’re focused on empowering our people with tools, training and a mindset of continuous learning. We’re investing in AI literacy at every level, creating opportunities for auditors to experiment with emerging technologies, and fostering a culture where curiosity and accountability go hand in hand. Technology will amplify what we do—but it’s our human judgment, integrity and ability to make connections that will define audit quality in the age of AI.
Register for the NACD Directors Summit
The annual NACD Directors Summit is happening from October 12 – 15 in our nation’s capital. I’m excited to be a speaker at this year’s conference and share my insights on the current risk landscape, such as geopolitical uncertainty, cyber threats, and digital disruption. If you haven’t signed up, there’s still time to register for the Summit. I hope to see you there!
Register for the 21st Annual SEC Reporting & FASB Forum for Mid-sized & Smaller Companies
In a changing regulatory landscape, mid-sized and smaller reporting companies need to keep pace as changes are expected with a new Administration. To this end, the 21st Annual SEC Reporting and FASB Forum is taking place on September 25 in New York City. I’m excited to share and unpack the latest PCAOB updates with attendees. Register now and see you in the Big Apple!
Dennis McGowan
Vice President, Professional Practice and Anti-Fraud Initiatives