As part of the Center for Audit Quality’s (CAQ) ongoing effort to keep members and stakeholders informed on significant public policy and accounting matters, we are pleased to offer the Public Policy and Technical Alert (PPTA). Each month, the PPTA highlights and examines the regulatory, standard-setting, legislative, and broader financial reporting developments impacting the public company audit profession. Please note that the PPTA is intended as general information and should not be relied upon as being definitive or all-inclusive. The CAQ encourages member firms to refer to the rules, standards, guidance, and other resources in their entirety at the hyperlinks provided below. All entities should carefully evaluate which requirements apply to their respective organizations.
In This Issue
SEC Announces Agenda and Panelists for Roundtable on Financial Surveillance and Privacy
The SEC’s Crypto Task Force announced the agenda and panelists for its rescheduled Roundtable on Financial Surveillance and Privacy. The roundtable was held at the SEC’s headquarters at 100 F Street, N.E., Washington, D.C., on December 15, 2025. A video of the roundtable can be found here.
Statement in Connection With the 2025 AICPA Conference on Current SEC and PCAOB Developments
The SEC released a statement by SEC Chief Accountant Kurt Hohl in connection with the 2025 AICPA Conference on Current SEC and PCAOB Developments. This statement describes remarks made by Hohl during a fireside chat with Julie Bell Lindsay, CEO of the Center for Audit Quality, at the 2025 AICPA Conference on Current SEC and PCAOB Developments held on December 8, 2025, in Washington, D.C.
Board Member Christina Ho to Leave the PCAOB
The PCAOB announced that Board Member Christina Ho will conclude her service on the Board effective the earlier of January 31, 2026, or the date the SEC appoints a successor for her position as Board Member. Her term on the Board expired on October 24, 2025. Board Member Ho was sworn in on November 9, 2021, after her appointment by the SEC in November 2021. During her PCAOB tenure, she chaired the Technology Innovation Alliance Working Group, which brought together professionals from outside of the PCAOB with expertise in emerging technologies.
PCAOB Approves 2026 Budget
The PCAOB approved its fiscal year 2026 budget at an open meeting on December 19, 2025. Subject to approval by the SEC, the PCAOB’s budget reflects the resources expected to be necessary for the organization to carry out its statutorily mandated responsibilities under the Sarbanes-Oxley Act. For 2026, the budget is $362.1 million.
FASB Issues New Standard to Add Guidance on Accounting for Government Grants by Businesses
The FASB published an Accounting Standards Update (ASU) that establishes authoritative guidance on the accounting for government grants received by business entities. The amendments in the ASU provide recognition, measurement, and presentation guidance for government grants received by business entities. The amendments in the ASU also:
- Define government grants and clarify their scope
- Establish recognition criteria
- Include disclosure requirements regarding the nature of government grants, accounting policies applied, and significant terms and conditions.
FASB Issues New Standard to Improve Interim Reporting
The FASB issued an ASU that improves the navigability of the required interim reporting disclosures and clarifies when that guidance is applicable. It also provides additional guidance on what disclosures should be provided in interim reporting periods. The amendments in the ASU:
- Clarify that the guidance in Topic 270 applies to all entities that provide interim financial statements and notes in accordance with GAAP
- Create a comprehensive list in FASB Accounting Standards Codification Topic 270 of interim disclosures that are required in interim financial statements and notes in accordance with GAAP
- Incorporate a disclosure principle, which is modeled after previous SEC guidance, that requires entities to disclose events and changes that occur after the end of the most recent fiscal year that have a material impact on the entity
- Improve guidance about information included in and the format of interim financial statements.
The ASU, including transition and effective date information, is available at www.fasb.org.
2026 FASB Taxonomies Now Available
The FASB announced the availability of the 2026 GAAP Financial Reporting Taxonomy (GRT), the 2026 SEC Reporting Taxonomy (SRT), and the 2026 GAAP Employee Benefit Plan Taxonomy (EBPT). The FASB also announced the availability of the 2026 DQC Rules Taxonomy (DQCRT) and the 2026 GAAP Meta Model Relationships Taxonomy (MMT), which, together with the GRT, SRT, and EBPT, is collectively referred to as the “FASB Taxonomies.” The 2026 GRT, 2026 SRT, and 2026 EBPT are expected to be accepted as final by the SEC in early 2026.
FASB Issues Standard on Codification Improvements
The FASB published an ASU focused on updating the FASB Accounting Standards Codification for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. The amendments in the ASU, which addresses 33 issues, affect a wide variety of Topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance. The ASU, including transition and effective date information, is available at www.fasb.org.
Public Markets Advisory Committee (PMAC) Meeting Recap: November 13, 2025
The FASB announced that the PMAC met on November 13, 2025, at the FASB’s offices. At the meeting, the PMAC members discussed the following topics:
- FASB Update
- Agenda Consultation Review
- Private Company Council Projects Update
- Accounting for Derivatives
- Post-Implementation Review—Current Expected Credit Losses
- Effects of the Use of Technology on Standard Setting
Financial Accounting Standards Advisory Council (FASAC) Meeting Recap: December 2, 2025
The FASB announced that the FASAC held its quarterly meeting on Tuesday, December 2, 2025. The FASB Chair provided highlights on FASB activities, and staff members from the SEC and PCAOB, and the AICPA Peer Review Board Chair commented on current issues and activities. Council members discussed the following topics.
- Risk Management and Hedge Accounting
- Implementation of Recent Standards (including Crypto Assets) and the Use of Resulting Information
Professional Ethics Executive Committee (PEEC) Publishes Final Clarifications in the AICPA Code of Professional Conduct for Engagements Subject to Statements on Standards for Attestation Engagements (SSAEs)
The AICPA’s PEEC adopted the following to clarify the application of requirements to engagements subject to the SSAEs:
- New definition of period covered by the attest report
- Revisions to various interpretations
The revisions are effective for engagements performed in accordance with the Statements on Standards for Attestation Engagements commencing on or after June 15, 2026, and early implementation is allowed.
Professional Accounting Coalition Expresses Strong Opposition to Draft Regulation Excluding Accounting from Professional Degree Designation
The AICPA, together with eight other professional accounting organizations representing approximately 1.5 million accounting and finance professionals, sent a letter to the U.S. Department of Education expressing strong opposition to any draft regulation which would exclude accounting programs from a professional degree designation and urging that accounting programs be included as a professional degree in the proposed rule.
AICPA Seeks Comment on Ethics Rules Update for Alternative Practice Structures
The AICPAs’ Professional Ethics Executive Committee (PEEC) voted to seek public comment on proposed revisions to the AICPA Code of Professional Conduct that bear on alternative practice structures, particularly those that involve private equity investment. Interested parties will have until April 30, 2026, to respond to the exposure draft, Proposed Revisions Related to Alternative Practice Structures, which was posted online here.
PEEC Open Meeting Minutes: November 2025
The AICPA’s PEEC covered the following topics in the November 2025 meeting:
- Alternative practice structures
- Engagements subject to SSAEs
- International: Engagement team/group audits
- Digital assets
- Artificial intelligence
- Federal Acquisition Act and preventing organizational conflicts of interest
Financial Reporting Council (FRC) Report Highlights Non-Big Four Firms Continuing to Build Presence in Public Interest Entity (PIE) Audit Market
The FRC published its annual Audit Market and Competition Update, showing that initiatives to promote a more resilient and competitive audit market have supported firms outside of the Big Four to build their share of PIE audit engagements. In addition to outlining the latest developments relating to audit market dynamics and competition, the report outlines recent progress across several key areas where the FRC is proportionately facilitating a well-functioning audit market to support competition and growth: building capacity for smaller firms, improving access to audit services, and embedding proportionality to reduce burdens.
FRC Launches Consultation on Draft Plan and Budget for 2026-27
The Financial Reporting Council (FRC) launched a consultation on its draft plan and budget for 2026-27, which sets out its priorities and resources for the year ahead. The consultation on the FRC’s draft plan and budget is open until February 6, 2026.
International Accounting Standards Board (IASB) Proposes New Accounting Model to Reflect How Financial Institutions Manage Interest Rate Risk
The International Financial Reporting Standards (IFRS) Foundation announced that the IASB has proposed a new accounting model to better reflect how financial institutions manage interest rate risk throughout their portfolios. To integrate the new accounting model and enhance companies’ disclosures about their interest-rate risk management activities, the IASB is proposing amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures. The IASB is also seeking feedback on its proposal to withdraw IAS 39 Financial Instruments: Recognition and Measurement. The IASB’s consultation on the Risk Mitigation Accounting model is open for comment until July 31, 2026.
December 2025 IASB Update and Podcast Now Available
The IFRS Foundation announced that the December 2025 IASB Update and podcast are now available.
International Ethics Standards Board for Accountants (IESBA) Focus: Firm Culture & Governance
The IESBA shared a video spotlighting the Firm Culture and Governance project — a key initiative exploring how to develop a framework that supports the cultures and governance practices that shape ethical behavior. The video is part of the IESBA Focus series.
AI, Digital Assets, and Sustainability: What Form 10-Ks Tell Us About Reporting Trends
The CAQ posted an article written by Desiré Carroll, CPA, CA(SA), Senior Director, Professional Practice, on the CAQ’s analysis of S&P 500 companies’ SEC Form 10-Ks. Carroll provides her key takeaways from the 10-K analysis regarding:
- The rapid rise of AI disclosures;
- New blind spots introduced by digital assets;
- Consistency of sustainability-related disclosures; and
- The future of the profession, and how auditors can support these evolving disclosures.
Annual Audit Committee Disclosure Barometer Reveals Stagnation in Key Disclosure Areas Despite Period of Disruption
The CAQ and Ideagen Audit Analytics released the 12th annual Audit Committee Transparency Barometer Report. This year’s Barometer shows that while skills matrix disclosure continues at high rates and disclosure of cybersecurity expertise on boards has grown, most disclosure areas have stagnated or declined, providing audit committees with an opportunity to enhance transparency about their evolving oversight responsibilities. Key findings of the report include:
- 90% of S&P 500 companies disclosed the board of directors’ skills matrix, an increase from 85% in 2024. S&P MidCap companies (80%) and S&P SmallCap companies (70%) also showed slight increases.
- 65% of S&P 500 boards disclosed they have a cybersecurity expert — representing a 5-percentage point increase from 2024.
- Stagnation and decline of audit committee disclosures were observed across several measures, including (for S&P 500 companies): disclosure of the annual evaluation of the external auditor (decreased from 39% to 38%); considerations in appointing or (re)appointing the external auditor (remained flat at 50%); and factors contributing to the selection of the audit partner (decreased from 17% to 16%).
Culture Technology, and Vigilance: How the Fraud Risk Landscape Is Evolving
The CAQ posted an article written by Lucy Wang, CFE, Director, Anti-Fraud Initiatives, about the webinar hosted by the Anti-Fraud Collaboration (AFC) this fall on the evolving landscape of fraud risk. Wang moderated a panel of diverse stakeholders, and she shares her top insights from the discussion, including:
- The Reality of Fraud Losses: Perception vs. Data;
- The Shifting Fraud Risk Landscape: External Threats Take Center Stage;
- The “Why”: Contributing Factors and The Culture Gap; and
- Looking Ahead: Vigilance is Key.
Closing the Transparency Gap: Aligning Audit Committee Actions With Disclosures
The CAQ posted an article written by its staff and the Ideagen Audit Analytics staff on how a “transparency gap” in proxy disclosures presents an opportunity for audit committees to better tell their story. The article discusses the following topics:
- Oversight of the External Auditor: The Need for Tailored Disclosures;
- Where Disclosure Matches Audit Committee Priorities;
- The “Skills Matrix” as a Standard; and
- Looking Ahead.
Fostering Constructive Dialogue With the External Auditor
The CAQ posted an article written by Vanessa Teitelbaum, CPA, Senior Director, Professional Practice, on conducting a structured annual evaluation of the external auditor’s independence. Teitelbaum discusses what the assessment should encompass to ensure the evaluation is comprehensive and addresses the core drivers of audit quality:
- The engagement team.
- The audit firm.
- Communication and interaction.
- Independence and professional skepticism.
Teitelbaum identifies key operational practices that can help strengthen this important partnership between the external auditor and the audit committee:
- Going beyond the meeting.
- Starting engagement partner succession planning early.
- Addressing sensitive topics.
The Center for Audit Quality is a nonpartisan public policy organization serving as the voice of U.S. public company auditors and matters related to audits of public companies. The CAQ promotes high quality performance by U.S. public company auditors; convenes capital market stakeholders to advance the discussion of critical issues affecting audit quality, U.S. public company reporting, and investor trust in the capital markets; and using independent research and analyses, champions policies and standards that bolster and support the effectiveness and responsiveness of U.S. public company auditors and audits to dynamic market conditions. Based in Washington, DC, the CAQ is affiliated with the American Institute of CPAs. For more information, visit www.thecaq.org.
The CAQ Public Policy and Technical Alert (PPTA) is intended as general information and should not be relied upon as being definitive or all-inclusive. As with all other CAQ resources, this is not authoritative and readers are urged to refer to relevant rules and standards. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The CAQ makes no representations, warranties, or guarantees about, and assumes no responsibility for, the content or application of the material contained herein and expressly disclaims all liability for any damages arising out of the use of, reference to, or reliance on such material. This publication does not represent an official position of the CAQ, its board, or its members.
Questions and comments about the Public Policy & Technical Alert can be addressed to Donnie Heinerichs, Manager, Professional Practice (dheinerichs@thecaq.org) or Annette Schumacher, Senior Director, Professional Practice (ashumacher@thecaq.org).