Welcome to another edition of Capital Markets Pulse, a monthly newsletter from the Center for Audit Quality that brings you insights, resources, and tools on the latest issues impacting the capital markets.
As summer concludes and we enter the final months of the year (which I cannot believe), the public company audit profession continues to navigate significant developments in regulation, leadership transitions, and innovation in emerging areas like artificial intelligence and digital technologies. The CAQ provides resources to help financial reporting professionals stay on top of these developments.
Read on for what’s on my radar this month.
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.
Profession Updates
The White House Released America’s AI Action Plan
In July, the Trump Administration released its long-awaited blueprint for AI. The action plan is a strategic roadmap focused on innovation, infrastructure and international leadership. In an effort to accelerate American dominance in AI, the plan outlines near-term federal policy priorities aimed at boosting private sector innovation, removing regulatory roadblocks, and strengthening global competitiveness. The plan references the need for quality datasets, AI skill development in the American workforce, and evaluations of how the AI industry assesses the performance and reliability of AI systems; themes that certainly resonate with the public company audit profession. In the spirit of governmental agencies themselves utilizing this technology, the SEC announced an AI task force, led by Chief AI Officer Valerie Szczepanik, to centralize and enhance innovation and efficiency in its operations.
Here at the CAQ, we have previously shared how auditors and audit committees can better elevate their understanding of GenAI and what it means for the public company audit profession. We will continue to provide resources that help the profession respond effectively to AI risks and opportunities, ensuring assurance remains a foundation for trusted innovation.
The White House Released Report on the Digital Financial Technology Space
Last month, the White House also released a report outlining regulatory and legislative proposals to support U.S. leadership in the digital assets and financial technology space. This is part of President Trump’s Executive Order related to digital financial technology, which was issued in January. The report included the following recommendations:
- Protect Lawful Use of Digital Assets: American citizens and businesses should be free to own digital assets and use blockchain technologies for lawful purposes without fear of prosecution. Entrepreneurs and software developers deserve the liberty—and regulatory certainty—to drive innovation across every sector of the economy.
- Strengthen U.S. Digital Asset Markets: Policymakers and regulators should lay the foundation for American digital asset markets to become the deepest, most liquid, and most trusted in the world.
- Modernize Banking Regulation: Banking regulators must reject discriminatory practices and instead embrace the opportunities digital assets and blockchain technologies offer to banks and financial institutions nationwide.
- Advance U.S. Dollar-Backed Stablecoins: U.S. dollar-backed stablecoins represent the next frontier in payment innovation. Policymakers should promote their responsible adoption to strengthen the global role of the U.S. dollar in the digital economy.
- Target Illicit Use, Protect Lawful Activity: Law enforcement agencies must have the tools to pursue illicit activity involving digital assets, while ensuring those tools are never misused to target the lawful actions of individuals or businesses.
- Modernize Federal Tax Policy: Federal tax policy should reflect the unique nature of digital assets and address longstanding calls for clarity from investors and innovators seeking to comply with the law.
The SEC was a member of the working group formulating these recommendations and SEC Chairman Paul Atkins released a statement in support of the report.
Closer to home, the CAQ submitted a letter to Commissioner Hester M. Peirce and Members of the SEC Crypto Task Force supporting increased regulatory clarity related to crypto assets. The CAQ previously shared resources for audit committees when assessing digital assets. My colleagues and I will continue to monitor and share updates as they occur.
PCAOB Updates
The Audit Effect: How Auditors Respond to AI
The second part of our three-part series with the Wall Street Journal is here! As the potential for Gen AI to transform financial reporting continues at lightning speed, “How Auditors Maintain Trust in Financial Reporting in the Age of AI” touches on how independent auditors apply their expertise to help shape AI adoption in ways that are responsible, reliable, and transparent and features practical insights from BDO, EY, and PwC.
We previously focused on how auditors go “beyond the balance sheet,” spotlighting the value public company auditors deliver by strengthening confidence in today’s complex financial landscape.
Similarly, in an Audit in Action blog, Richard Jackson, Global Artificial Intelligence Assurance Leader at EY, shares how auditors can harness AI responsibly to identify emerging trends and risks.
In a recent CAQ survey, we found that 45% of institutional investors noted enhanced risk assessment and prioritization as an advantage of integrating AI into the audit process, and 64% believe the use of AI will improve audit accuracy and efficiency and the profession’s ability to anticipate and address emerging risks. Read more and learn how to best leverage this rapidly changing technology to help deliver audit quality.
The CAQ Released the Latest Institutional Investor Survey
In July, we released the latest findings from our institutional investor survey series. As a result of an ever-evolving technological landscape, investors increasingly believe that fraud risk at U.S. public companies is elevated. We also found that most investors believe that fraud prevention and detection can be more successful by placing a greater focus on monitoring transactions, especially with AI, and via employee training and culture.
As a member of the Anti-Fraud Collaboration, we know that all members of the financial reporting ecosystem must play a role in the fight against fraud. The profession must remain vigilant as advanced technologies become more sophisticated. We will continue to share resources on how to deter and detect fraud, especially in a changing landscape.
Download the report for more investor insights.
23 Years of SOX: Reflecting on The Landmark Legislation
July marked the 23rd anniversary of the Sarbanes-Oxley Act (SOX), the landmark legislation that reshaped financial reporting standards and audit oversight in the U.S. capital markets. Since its passage in 2002, SOX has shaped a strong accountability and oversight environment. Its principles continue to guide the public company audit profession and help ensure investors receive reliable, decision-useful information.
As our markets evolve, assurance from public company auditors, grounded in independence and rigor, remains key to transparency, resilience, and trust. Explore how SOX transformed the profession’s approach to audit quality and continues to shape how we build and sustain trust in our capital markets.
The Talent Pipeline: Updates on Accounting+
The accounting profession, like many others, is navigating a workforce shortage. The Accounting+ program has been helping address the profession’s talent challenges by reaching students early on in their academic journey to ensure they are aware of the benefits of an accounting career and dispel misperceptions that exist.
The second year of Accounting+’s partnership with the Pittsburgh Steelers continued to deliver strong results. Our “Steelers Showcase” program included three events, each designed to give students a deeper understanding of the profession. The final event, held in April at Acrisure Stadium, challenged students to solve a financial mystery alongside professionals from our member firms—offering a hands-on look at careers in forensic accounting. This partnership continues to be an important platform for introducing students to diverse career opportunities in accounting, especially in industries they’re already passionate about. You can catch a glimpse of the impact by watching our 2024–2025 wrap-up video on the Steelers’ website.
Upcoming Axios Event on AI
As AI takes on a bigger role in shaping our capital markets and public policy, successful integration of the technology is built around developing governance that ensures trusted results and encourages innovation. I’ll be joining policy, business and tech leaders at the upcoming Axios AI+ Summit here in our nation’s capital to discuss how the audit profession can help establish the transparency and credibility that are crucial for AI’s beneficial deployment in society.
I look forward to discussing how we can bridge the demands of investors and the need for reliable information in a rapidly changing AI landscape. Stay tuned as I share my takeaways in the next edition.
Julie Bell Lindsay
Chief Executive Officer, CAQ