Welcome to another edition of Capital Markets Pulse. Moving to a quarterly cadence allows for a deeper look at the issues and opportunities shaping the audit profession in an increasingly complex business environment. The CAQ’s other newsletters, including Audit Insider and Audit Committee Insights, will continue to provide information on the latest developments in the profession targeted to auditors, audit committees, and other stakeholders who rely on the audit.
Right now, the audit profession is at a critical inflection point. We are managing a strategic change in regulatory leadership and priorities, exploring the evolving skillset auditors will need as AI and other advanced tools change the assurance landscape, and examining the true drivers of value in corporate disclosures and investor confidence in our capital markets. These developments are deeply interconnected, reflecting broader market dynamics that continuously shape the audit profession.
Read on for the latest updates and insights from the profession.
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.
CAQ Updates
What Investors Are Telling Us
Investors continue to rely heavily on the rigor of our profession. In our latest investor survey, 90% of institutional investors report relying on audited financial statements to a great extent, and 91% trust their accuracy. But this confidence is not unconditional. A look at the data reveals a clear mandate: investors want evolution in corporate reporting, but they expect clear guardrails before that evolution scales.
From our research, three defining trends are currently shaping this landscape:
1. The Demand for Expanded Assurance is Outpacing Current Frameworks
Demand for corporate disclosures beyond the financial statements is surging, with over 80% of investors frequently using cybersecurity, data privacy, and governance disclosures to make investment decisions. Yet barriers to widespread assurance exist, primarily due to regulatory clarity. Investors are clear: they are already using these disclosures, but assurance would meaningfully increase their value by enhancing trust in the information and strengthening confidence in the decisions they support.
2. Innovation Must be Anchored in Discipline
Nearly 90% of investors believe it is important for auditors to pursue technological innovation. They see the strongest use cases for AI in enhancing fraud detection, expanding data sample sizes, and reducing costs.
Paired with this enthusiasm for innovation are expectations for discipline. Investors cite data security, loss of human judgment, and a lack of clear standards as primary concerns as the profession adopts new ways of operating. Across both expanded assurance and technology, the message is consistent: innovation earns trust when accompanied by appropriate safeguards.
3. Investors Expect Effective, Proportional Oversight
While more than 95% of investors link regulatory oversight to increased confidence in audits, nearly one-third believe the current regulatory burden on auditors is too high. They are calling for effective, proportional oversight, rather than sheer compliance volume. We see this pragmatism in their view of market risks as well. Investors recognize a shared-responsibility model for fraud prevention, ranking internal audit teams, management, and boards as the primary lines of defense.
For those of us leading within the profession, this data offers a critical blueprint. As the profession implements new changes, it’s important to remember that guardrails are not barriers to progress; they are the foundations that make innovation credible.
The Next Chapter in Investor Engagement
The CAQ has a strong history of two‑way engagement with investors, from our auditor‑investor dialogues to salon dinners and in‑depth qualitative research. Now, we’re building on that foundation by partnering with Axios to explore new ways to engage this critical stakeholder group. This next phase will continue to reinforce the value of a high‑quality audit for investors, while sharpening the profession’s understanding of investor expectations. Next stop: we’re joining Axios at the Milken Global Conference in Los Angeles in May. Stay tuned for more updates.
Creating Accounting Pathways Students Can Actually Navigate
Earlier this year, I published my 2026 Audit Profession Outlook. This year’s theme, “A Post-Disruption Era: Trust, Transparency, and the Audit Profession,” reflects where I believe the profession is today: past the initial shock of rapid technological and regulatory change, and now focused on the harder work of integration and accountability.
In 2026, talent is one of the defining challenges I outlined, and the Accounting+ Annual Report offers some encouraging signals. For the first time in four years, high school students reported a decline in perceived barriers to pursuing accounting, with an 8-point increase in awareness and an 18-point increase in interest compared to 2022. Through our strategic partnership with EVERFI, we’ve embedded accounting awareness curricula in over 12,000 schools nationwide, with 80% of students saying the course showed them accounting careers they didn’t know existed. This marks an encouraging moment for the profession, demonstrating continued interest in accounting careers and reaffirming that early outreach efforts work.
A recent piece in The CPA Journal framed the challenge well: the gap between aspiration and reality in the accounting pipeline is real, and closing it requires not just better messaging, but structural change in how the profession presents itself as a career destination, especially in an era when students have more options than ever.
Our Capital Markets Pulse Podcast episode on the Profession Outlook digs into this further — I’d encourage you to listen if you haven’t already.
Regulatory Updates
A New PCAOB: What a ‘Back to Basics’ Approach Should Mean in Practice
The Public Company Accounting Oversight Board (PCAOB) ends the first quarter amidst a significant change in board leadership. Following the SEC’s approval of a streamlined 2026 budget, the transition anticipated since the change in administration is now fully underway. The CAQ looks forward to constructively engaging with the new and returning board members and sharing our perspectives on the profession’s priorities at such a pivotal time.
Applying the SEC’s “back to basics” philosophy, we expect the PCAOB’s core statutory mission of protecting investors through informative, accurate, and independent audit reports to take center stage. From my perspective, translating this approach into practice requires focusing on two critical areas:
- Getting Quality Control Right: The PCAOB’s Quality Control 1000 standard, adopted by the Board in May 2024 (and SEC in September 2024), represents a landmark update to existing U.S. quality control rules that predate the PCAOB itself. The standard’s risk-based architecture recognizes the significant enhancements firms have made to their quality control systems since the PCAOB was founded. It also recognizes and adopts many aspects of the recently updated international standard. Despite these positive steps, the CAQ submitted a letter to the PCAOB in July 2025 requesting a deferral of the effective date (it was to be effective December 2025), targeted amendments to the final standard, and substantive implementation guidance. While the profession appreciates the Board granting the deferral of the effective date to December 2026, we continue to believe certain of the requirements included in the U.S. standard – which go over and above the international standard – may not provide the perceived added benefits necessary to outweigh the costs to the audit firms, and we continue to seek written implementation guidance on various issues. With the new Board in place, we are hoping to see movement on these matters soon, particularly given the new effective date in December 2026.
- Modernizing the Inspection Model: The PCAOB’s inspection program has undoubtedly played an important role in improving audit quality over the last two decades. However, the way firms execute their audits has changed since the program was designed and implemented. The question the new Board needs to explore is whether the current inspection program is calibrated in a cost-effective way that reflects the investments firms have made in their systems of quality control.
The CAQ will be engaging with the new Board members on these priorities, and I look forward to those conversations.
The SEC and Regulation S-K
On the SEC side, Chairman Atkins’ statement on Regulation S-K signals a willingness to revisit disclosure requirements with fresh eyes, with public comment due in April. The CAQ has long believed that the disclosure framework should serve investors, not overwhelm them. If a rulemaking process can result in clearer, more decision-useful financial information, that is a direction worth engaging seriously.
Earlier this quarter, the House Committee on Financial Services held the first formal oversight hearings under the new SEC leadership in which Chairman Paul Atkins testified about his priorities and answered questions from members of the Committee. The exchange made clear just how actively Congress is scrutinizing the intersection of regulation and capital markets. Disclosure reform was central to the discussion: Chairman Atkins called for the modernization and streamlining of companies’ annual reports, expanding on his January initiative to conduct a comprehensive review of Regulation S-K.
That legislators and the Chairman are openly aligned on reforming the core public company disclosure framework is a signal the profession should not miss: this is a moment that calls for the profession to be visible, constructive, and clear about the role that high-quality financial reporting plays in market integrity.
Looking Ahead
On March 26, the CAQ’s webinar series for audit committees continues its journey in exploring the evolution of AI in financial reporting. Be sure to bring questions for our panel of experts, and I hope that you will be able to join us for this timely conversation. Register here.
Across all of these developments, this is what I keep coming back to: the profession is at its strongest when it is forward-looking, transparent, and willing to engage with the hard questions. The CAQ’s role is to be a credible voice in that conversation. One grounded in data, clear-eyed about challenges, and optimistic about what a well-functioning audit profession makes possible for the markets and the people who depend on them.
That’s the work. And I’m glad to be doing it alongside all of you.
Julie Bell Lindsay
Chief Executive Officer, CAQ