AUDIT COMMITTEE AND AUDITOR OVERSIGHT UPDATE

At the beginning of each year, many accounting and consulting firms present their views on the issues that should be on audit committee agendas during the next 12 months.  For 2026, those papers include:   BDO, Audit Committee Priorities for 2026 .   EY Center for Board Matters, 2026 audit committee priorities: navigating complexity and change .   KPMG Board Leadership Center, On the 2026 audit committee agenda .   Protiviti, Setting the 2026 Audit Committee Agenda .   PwC Go

The Center for Audit Quality (CAQ) has released an analysis of S&P 500 company Form 10-K disclosures on climate, artificial intelligence, and digital assets.  Analysis of S&P 500 Companies’ 10-Ks  provides “a snapshot of what S&P 500 companies typically disclose and where they disclose that information within the 10-K” on these three topics. The CAQ’s analysis examines the most recent Form 10-Ks for S&P 500 companies as of June 2025. (These reports generally relate to the com

Members of the Public Company Accounting Oversight Board’s Investor Advisory Group (IAG) have published The Second Annual Investor Advisory Group Most Decision-Useful Critical or Key Audit Matters For 2024 .  The report discusses four topics:  a brief history of critical audit matters (CAMs), the IAG’s activities related to CAMs, the findings of the IAG’s CAM evaluation process, and suggestions for improving CAMs. For audit committees, the IAG report provides insight into how

On December 16, the European Parliament approved Omnibus I , a package of amendments to the E.U.’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD or CS3D).  These reforms, proposed by the European Commission in February 2025, reduce sustainability reporting burdens, simplify the CSRD and CSDDD, and narrow the scope of companies subject to the directives.  See E.U. is Dialing Back Sustainability Reporting and Due

Securities and Exchange Commission Chair Paul Atkins has announced that the Commission will undertake a comprehensive review of Regulation S-K, which contains the core public company disclosure requirements.  See Statement on Reforming Regulation S-K . In his January 13 statement, Chair Atkins said that during the past 40 years, the requirements of Regulation S-K have “grown from the size of a gym locker to the size of an artificial-intelligence data center” and that the disc

In early 2026, the Securities and Exchange Commission will appoint a new PCAOB Chair and, in all probability, a new slate of Board members.  Given the SEC’s deregulatory priorities, the new PCAOB is likely to make significant changes to the Board’s agenda.  During the AICPA’s December 2025 Conference on Current SEC and PCAOB Developments, SEC Chief Accountant Kurt Hohl offered hints as to what that agenda may include.   Mr. Hohl’s statement  touched on a wide range of accoun

The Center for Audit Quality (CAQ) and Ideagen Audit Analytics (IAA) have released the Audit Committee Transparency Barometer 2025  ( Barometer 2025 ), the twelfth edition of the CAQ’s annual analysis of audit committee disclosures. The press release  announcing Barometer 2025  reports 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.”  Key findings of

During fiscal year 2025, the Securities and Exchange Commission brought 30 percent fewer cases against public companies and their subsidiaries than in FY 2024, and 93 percent of the 2025 cases were brought before January 25, 2025 – the day on which Biden Administration SEC Chair Gensler resigned.  Those findings are reported in SEC Enforcement Activity: Public Companies and Subsidiaries—Fiscal Year 2025 Update , the annual report of Cornerstone Research and the New York Unive

Auditors frequently face client incivility -- “low-intensity deviant behavior with ambiguous intent to harm the target” – and, when they do, they are less likely to challenge aggressive financial reporting.  There are, however, coping strategies that may reduce the adverse effects of client incivility on the auditor’s judgment. These are some of the findings of The Influence of Client Incivility and Coping Strategies on Audit Professionals’ Judgments , a survey and experiment

The Securities and Exchange Commission has apparently thrown in the towel in its controversial campaign to use the internal control requirements of the Securities Exchange Act as a tool to sanction public companies for cybersecurity weaknesses.   In 2023, the SEC brought an enforcement action against SolarWinds Corporation and its Chief Information Security Officer, charging the company with, among other things, violating the requirement in Section 13(b)(2) of the Exchange Ac

The Court of Appeals for the Ninth Circuit has issued an order   temporarily blocking implementation of California Senate Bill 261 (SB 261).  SB 261, the Climate-Related Financial Risk Act , requires U.S. public and private entities with annual global revenue exceeding $500 million that do business in California to disclose their climate-related financial risks and the measures they are taking to reduce and adapt to those risks. See California Outflanks the SEC on Climate D

Technology, business transformation, and digitization are internal audit’s primary concerns according to consulting firm Jefferson Wells’ 2025 Internal Audit Priorities Annual Survey .  The top concerns of audit committees are similar, with Generative Artificial Intelligence (GenAI) now second only to data privacy and cybersecurity. Jefferson Wells’ study involved 257 audit leaders from U.S. for-profit companies across different industries and regions.    For internal audit l

The Center for Audit Quality (CAQ) has released an updated version of its External Auditor Assessment Tool: A Tool for US Audit Committees . Audit committees are responsible for evaluating the external auditor, at least annually, and making a recommendation to the board on whether to retain the auditor. The assessment tool is designed to assist audit committees in performing this evaluation. The CAQ originally issued the U.S. assessment tool, along with a companion worldwide

Oversight of the risks and opportunities presented by artificial intelligence (AI) is one of the key challenges facing audit committees.  From March to June 2025, Tapestry Networks (Tapestry) convened six in-person meetings of its U.S. audit committee network to discuss the role of the board in ensuring that AI is implemented responsibly and consistent with long-term value creation. Tapestry’s audit committee network, which is organized and supported by Ernst & Young, is a gr

Public company audit fees rose to record levels last year. Ideagen Audit Analytics’ (IAA) annual analysis of fees paid to external auditors reports that, in FY2024, the average public company’s total payments to its auditor rose to $3.26 million, a nine percent increase from 2023.  See Audit fee trends: A 20-year review  (September 2025).  Average fees rose for the third consecutive year in 2024, a trend that IAA attributes to “the increasing complexity and regulatory demands

The Governance & Accountability Institute (G&AI) has released 2025 Sustainability Reporting In Focus , the fourteenth edition of its annual series tracking sustainability reporting. The report analyzes trends in sustainability reporting by companies in the S&P 500 and Russell 1000 indices.  In a press release  announcing the 2025 report, G&AI says that its research “shows continued increases in sustainability reporting for both large-cap and mid-cap U.S. public companies -- a

At the urging of President Trump, the Securities and Exchange Commission will consider whether to eliminate quarterly reporting. In a social media post on September 15, the President said, “Subject to SEC Approval, Companies and Corporations should no longer be forced to ‘Report’ on a quarterly basis (Quarterly Reporting!), but rather to Report on a ‘Six (6) Month Basis.’” He asserted that semi-annual reporting would allow management to “focus on properly running their compan

In a blog post  on the website of the National Association of Corporate Directors, the Center for Audit Quality’s Senior Director of Professional Practice, Vanessa Teitelbaum, suggests five questions that audit committees may want to ask their auditor regarding the firm’s PCAOB inspection report.   1.     How did your firm respond to areas identified as deficiencies in the inspection ?  This question provides “visibility into whether the auditor is taking corrective actions t

The Public Company Accounting Oversight Board’s Office of Economic and Risk Analysis (OERA) has published Data Points: Financial Restatements and Auditor Turnover .  The report finds that, from 2005 to 2024, 29 percent of Big R restatements followed an auditor change in the previous year. For the entire public company population, the Big R restatement rate was around three percent. OERA’s analysis excludes investment companies, employee benefits plan, and restatements relate