Request for Public Comment on PCAOB Standard Setting

Welcome to another installment of the Genuine Learning Blog, where we keep you updated on the latest developments affecting the auditing profession. Today’s discussion is centered on an important proposal from the PCAOB: a request for public comment concerning its approach to standard setting. The PCAOB released this request as part of an ongoing effort to refine its standard setting and research agendas, building on previous feedback about its strategic plan. The current focus includes determining which projects and topics deserve priority as the board looks to update its approach for the future.

Three core areas are under consideration. First, the PCAOB wants to hear opinions on which standards and research areas need the most attention next. Updating the standard setting and research agendas is critical—not only to address emerging areas but also to ensure relevance in our fast-changing business environment. Second, there’s interest in reconsidering how the PCAOB approaches standard setting itself. This includes possible changes to the process and methodology they use. Third, the board is considering how broader regulatory changes, such as the SEC’s proposal for semiannual (instead of quarterly) reporting, might affect auditors and the standards governing their work.

Specific areas of focus called out in the request include data and technology, fraud, critical audit matters, noncompliance with laws and regulations (NOCLAR), firm and engagement performance metrics, and auditor independence. The PCAOB is asking stakeholders such as CPAs, companies, and investors whether these topics should be the priority, and how they might be ranked. They also seek insights on whether certain topics would be better addressed through updated staff guidance rather than full-scale standard amendments.

The PCAOB is especially keen to learn whether there’s a need to modernize remaining interim standards that were carried forward from earlier regulatory regimes—standards relating to issues like going concern, inventory, or the use of service organizations. Feedback is also sought on the pace of standard setting, the adequacy of comment periods, considerations for effective implementation dates, and how economic benefits, cost, competitive implications, and unintended consequences should be weighed.

Further, the board is focusing on the impact of rapidly evolving technology, particularly artificial intelligence. Questions abound regarding how AI should influence standard setting or research—specifically its effect on risk identification, internal controls, and the sufficiency of audit evidence. There’s also an interest in knowing if certain existing standards don’t translate well to an AI-driven environment, and what additional topics might require attention as technology changes.

Digital assets have come up as another area of potential focus, reflecting feedback from the last strategic plan process. The PCAOB is openly weighing whether it’s necessary to address digital assets specifically, and if so, whether new standards or staff guidance would be the most effective route, especially around matters of access, ownership, control, and testing.

In addition to agenda content, the proposal explores the possibility of developing a conceptual framework for PCAOB standard setting. Many stakeholders have expressed support for increased transparency and consistency, similar to the frameworks adopted by the AICPA and FASB. Such a framework could spell out a principles-based approach for identifying and prioritizing projects, integrating qualitative factors, and providing explicit criteria for benefit and cost analysis. There’s also interest in alignment between PCAOB standards and those of other standard setters.

A hot topic tied to the SEC’s recent proposal on semiannual reporting is how changes in reporting frequency would affect auditor responsibilities—particularly regarding negative assurance about subsequent changes in financial statements. The board is evaluating current timelines (like the 135-day rule for financial statement age) and is seeking feedback on what the correct reporting period should be if changes are implemented.

If these issues resonate with you or your organization, the PCAOB is actively seeking comments through August 7. Feedback can be submitted via email or directly on the PCAOB website as part of the official request for comment on their standard setting. Stay engaged, as your input directly shapes the future standards governing our profession. We look forward to tracking these developments and sharing actionable insights with you in future blogs.