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
Crypto Asset Exchange-Traded Products
The SEC Division of Corporation Finance issued a statement providing its views on the application of certain disclosure requirements under the federal securities laws to offerings and registrations of securities by issuers of crypto asset exchange-traded products. This statement addresses its views about certain disclosure requirements set forth in Regulation S-K and Regulation S-X as they apply to Securities Act registration forms (such as Form S-1).
SEC Updated Questions and Answers for Compliance and Disclosure Interpretations (C&DIs)
The SEC updated the C&DIs around the following topic:
SEC Announces George Botic to Serve as Acting Chair of the PCAOB
The SEC announced that it has designated George R. Botic to serve as Acting Chair of the PCAOB, effective July 23, 2025. Botic is a Certified Public Accountant and became a PCAOB Board Member on October 25, 2023. Prior to joining the Board, he served as the Director of the PCAOB’s Division of Registration and Inspections. He previously served in various roles at the PCAOB.
SEC Issues Statement on Commencement of Appointment Process for Five Public Company Accounting Oversight Board Seats
SEC Chairman Paul Atkins released a statement on July 23, 2025 soliciting candidates for all five Board positions, including the Chairperson, of the PCAOB.
The PCAOB Board member selection process is administered by the SEC’s Office of the Chief Accountant. Individuals who meet the statutory criteria and are interested in being considered for a position as Board member of the PCAOB should submit (1) a cover letter, discussing the statutory qualifications summarized above and described more completely in the Act; and (2) a current résumé or curriculum vitae to Boardrecommendations@sec.gov, on or by August 25, 2025.
PCAOB Hosts Virtual Workshops to Assist Smaller Audit Firms With Implementation of New Quality Control Standard
The PCAOB hosted two virtual workshops designed to assist smaller audit firms with the practical implementation of QC 1000, A Firm’s System of Quality Control ahead of the December 15, 2025, effective date. The events were held on July 17 and July 31. Topics covered at the workshops were the following:
- July 17: QC 1000 Foundations, The Firm’s Risk Assessment Process, and QC System Components That Address Aspects of the Firm’s Organization and Operations
- July 31: The Monitoring and Remediation Process, Evaluating the Firm’s QC System, and Documenting the Firm’s QC System
The PCAOB is planning additional implementation-related events and materials. More information about these efforts as well as the PCAOB’s implementation guidance, tools, and resources for QC 1000 and other new standards, is available on the PCAOB’s Implementation Resources for PCAOB Standards and Rules page.
New Edition of Audit Focus Points a Lens on Engagement Acceptance
The PCAOB released a staff publication, Audit Focus: Engagement Acceptance. This edition of Audit Focus highlights key reminders for auditors who audit smaller public companies of PCAOB standards related to engagement acceptance for initial engagements for new clients. The Audit Focus also shares good practices that the PCAOB staff has observed, including regarding the following:
- Assessing Partner Capacity
- Implementation of a Pre-Assessment Process
- Use of Templates
Chair Williams Departs PCAOB July 22
The PCAOB announced that Chair Erica Y. Williams left the PCAOB on July 22. Williams was originally sworn in as PCAOB Chair in January of 2022 and was reappointed in June 2024 and sworn in on October 24, 2024. Under her leadership, the PCAOB developed and executed an ambitious strategic plan to modernize standards, enhance inspections, strengthen enforcement, and improve the PCAOB’s organizational effectiveness.
Investor Bulletin: The Importance of Auditor Professional Responsibilities and Ethics
The PCAOB published an investor bulletin that provides a brief overview of how auditor professional responsibilities and ethics are integral to public company auditing and discusses the role of the PCAOB in establishing and upholding auditor professional responsibilities and ethics.
Financial Accounting Standards Advisory Council (FASAC) Meeting Recap: June 5, 2025
The FASB posted a recap of the FASAC quarterly meeting held on June 5, 2025. The FASB chair provided highlights on FASB activities, and staff members from the SEC, PCAOB, and the AICPA Peer Review Board chair commented on current issues and activities. Council members discussed the following topics:
- Private Credit and Debt Disclosures
- Business Combinations
- Current Trends and Changing Business Practices
Financial Accounting Foundation (FAF) Seeks Nominations for the FASAC
The FASB announced that the Board of Trustees of the FAF is seeking nominations for new members to join the FASAC for an initial one-year term beginning January 1, 2026. The deadline to submit nominations is Friday, August 29, 2025.
FASB Issues Standard That Improves Measurement of Credit Losses for Accounts Receivable and Contract Assets
The FASB issued an Accounting Standards Update (ASU) that improves guidance on the measurement of credit losses for accounts receivable and contract assets. The new guidance, which is optional, addresses challenges faced by stakeholders when applying Topic 326, Financial Instruments—Credit Losses, to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue From Contracts With Customers.
AICPA Seeks Comment on Proposed Update to Auditors’ Responsibilities Related to Fraud
The AICPA announced it is seeking public comment on a proposed standard updating auditors’ responsibilities related to fraud. The proposed Statement on Auditing Standards (SAS), The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, contains a number of changes, including the establishment of required procedures for when an auditor has identified fraud or suspected fraud. The proposed SAS also reminds auditors to maintain professional skepticism throughout the audit. Comments about the exposure draft are due by October 3, 2025.
Responsible AI Implementation Checklist (with ISO/IEC 42001 Alignment)
The AICPA shared a checklist for implementing artificial intelligence (AI) responsibly. The checklist covers governance, AI lifecycle management, security, ethics, documentation and audit readiness, transparency, and ISO/IEC 42001 alignment for trusted use.
Draft 2026 Taxonomy Suite Published
The Financial Reporting Council (FRC) published a draft version of the 2026 Taxonomy Suite. The consultation is open to public comment for two months until September 10 and responses can be sent through Yeti or via email to xbrl@frc.org.uk.
FRC Published Annual Audit Firm Inspection Results
The FRC published its Annual Review of Audit Quality, which calls for all stakeholders of the U.K. audit landscape to work together to deliver a thriving market and profession working in the public interest. The report covers the inspection and supervision results of audit firms across the U.K. Public Interest Entity (PIE) market.
FRC Issued July Consultations
The FRC issued five consultations as part of its scheduled July release, seeking stakeholder input on a new Practice Note for auditing small and medium-sized enterprises (SMEs), the emerging findings of the FRC’s SME audit market study, targeted amendments to FRS 102, the U.K.’s PIE Auditor Registration Regulations, and an updated taxonomies suite.
U.K. Sustainability Disclosure Technical Advisory Committee (TAC) Seeks Views on International Sustainability Standards Board (ISSB) Amendments
The FRC, as secretariat to the U.K. Sustainability Disclosure TAC, is requesting views from stakeholders on the ISSB’s recently proposed amendments to the Sustainability Accounting Standards Board Standards. Stakeholders are invited to complete a short survey by Friday, August 29, 2025, to provide views on amendments set out in the ISSB’s exposure drafts.
International Auditing and Assurance Standards Board (IAASB) Revises Fraud Standard to Enhance Public Trust
The IAASB revised International Standard on Auditing (ISA) 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements. The standard incorporates the following elements:
- Clearer Auditor Responsibilities
- Reinforced Professional Skepticism
- Sharper Fraud Risk Assessment
- More Effective Fraud Responses
- Improved Transparency and Communication
ISA 240 (Revised) becomes effective for audits of financial statements for periods beginning on or after December 15, 2026.
IAASB Highlights How Revised Standards Reinforce Professional Skepticism
The IAASB released a new non-authoritative publication — How the IAASB’s Revised Going Concern and Fraud Standards Reinforce Professional Skepticism — to assist stakeholders in understanding how the revisions to ISA 570 (Revised 2024) and ISA 240 (Revised) strengthen the consistent application of professional skepticism throughout the audit. This publication highlights key enhancements to both standards reflecting the IAASB’s efforts to reinforce professional skepticism by addressing, among other matters, how auditors are expected to maintain a questioning mindset, consider contradictory evidence, and appropriately challenge management assumptions.
July 2025 IASB Agenda and Meeting Papers Now Available
The IFRS Foundation announced that the agenda, papers, and meeting summary of the July 2025 IASB meeting are now available. The IASB update and podcast are now available here.
IFRS Foundation Publishes Near-Final Examples on Reporting Uncertainties in the Financial Statements Using Climate-Related Examples
The IFRS Foundation published near-final examples demonstrating how companies can improve the reporting of uncertainties in their financial statements using climate-related examples as practical illustrations. This early publication is intended to support timely and informed application. Although the examples use climate-related fact patterns, they provide guidance that applies broadly to all types of uncertainties.
IESBA and IAASB Establish Expert Groups to Support Global Implementation of Sustainability Standards
The IESBA and the IAASB announced the recent formation of two expert implementation groups that will play important roles in supporting the effective implementation and application of the Boards’ recently released global sustainability standards:
- The IESBA’s International Ethics Standards for Sustainability Assurance (IESSA) Implementation Monitoring Advisory Group will support the implementation of IESSA (including International Independence Standards) and revisions to the IESBA code for sustainability reporting.
- The IAASB’s International Standard on Sustainability Assurance (ISSA 5000) Technical Implementation Contact Group will support implementation of ISSA 5000.
IESBA Publishes Summary of Feedback From Global Roundtables on Firm Culture and Governance
The IESBA released Firm Culture and Governance: Summary of Feedback from Global Roundtables, a publication that captures stakeholder perspectives from six global roundtables held earlier this year as part of the Board’s Firm Culture and Governance project. The insights gathered through these discussions have directly contributed to the IESBA’s recent decision to remain firmly committed to taking decisive steps to address the cultural and governance dimensions within accounting firms, recognizing their critical impact on ethical behavior. These insights will also shape the IESBA’s future work.
IESBA Staff Releases Additional Implementation Support Materials for IESSA
The staff of the IESBA released two implementation support publications to help sustainability assurance practitioners understand and apply the International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA):
- Key Differences Between IESSA and Parts 1 to 4A of the Code: A comparison document outlining the main differences between the IESSA and the corresponding provisions of the IESBA Code applicable to audits of financial statement.
- List of Prohibitions for PIEs in IESSA: A list of specific prohibitions in the IESSA applicable to sustainability assurance engagements of public interest entities (PIEs).
Private Equity Investment in Accounting Firms and Related Ethical and Independence Considerations: IESBA Issues Staff Alert
The IESBA issued a staff alert highlighting key ethical matters that accounting firms should pay particular attention to when considering or accepting investment from private equity organizations. Titled Private Equity Investment in Accounting Firms: Key Ethics and Independence Considerations, the staff alert draws the attention of professional accountants in public practice, particularly accounting firm leadership, to important ethics and independence provisions in the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code) that remain applicable both before and after private equity investment in an accounting firm.
S&P 500 Companies’ Sustainability Reporting and Assurance Practices
The CAQ published an article written by Desiré Carroll, CPA, CA(SA), Senior Director, Professional Practice at the CAQ, on sustainability reporting trends. Every year, the CAQ examines sustainability reporting trends among S&P 500 companies to understand how public companies are responding to investor demand and the role that auditors play in supporting these disclosures. Carroll shares key takeaways from the CAQ’s latest S&P 500 Sustainability Reporting and Assurance Analysis regarding use of sustainability reporting standards and frameworks, increased assurance from auditors, GHG emissions assurance or verification, and disclosures of net-zero or carbon neutral commitments.
Discussion Document on Monitoring Inflation in Certain Countries
The CAQ posted a Document for Discussion: Monitoring Inflation in Certain Countries as of May 2025. The document provides a framework for compiling inflation data to assist registrants in monitoring inflation statistics in connection with their determination of the inflationary status of countries in which they have operations. The document observes that Argentina, Burundi, Egypt, Ethiopia, Ghana, Haiti, Iran, Lao P.D.R., Lebanon, Malawi, Myanmar, Nigeria, Sierra Leone, South Sudan, Sudan, Suriname, Turkey, Venezuela, Zimbabwe have three-year cumulative inflation rates exceeding 100%.
From Crisis to Confidence: How SOX Reshaped Audit Quality
With July marking the 23rd anniversary of the Sarbanes-Oxley Act (SOX), the CAQ posted an article written by the CAQ staff about the landmark legislation that reshaped financial reporting standards and audit oversight in the U.S. capital markets. The article discusses how SOX enables the profession to continue evolving in today’s ever-changing economy, including what’s changed since the early 2000s, how SOX has served as a catalyst for the audit effect, how it has transformed how firms train and mentor the next generation of auditors, and why SOX’s framework remains key to upholding trust and transparency.
How Auditors Harness Responsible AI to Identify Trends and Sharpen Focus on Risk
The CAQ posted an article written by Richard J. Jackson, EY Global Artificial Intelligence Assurance Leader, on how auditors have an opportunity to leverage artificial intelligence (AI) enabled data processing and analytics. Jackson discusses how robust governance frameworks are driving responsible use of AI, how AI adoption requires an ongoing commitment to training and development, and how auditors can leverage AI to drive quality audits and differential insights.
Institutional Investor Survey: Research Findings, Fraud
The CAQ published the research findings from a survey conducted among institutional investors in the United States on topics related to the frequency and nature of fraud occurring at publicly traded companies.
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).