Investor protection is a key focus for audit committees and is reinforced by high-quality audits that support reliable information for decision-making. As the PCAOB develops its strategic priorities for 2026-2030, audit committees will have an opportunity to share their views on how regulators can strengthen the Board's oversight and help promote continued audit quality.
The Center for Audit Quality's Audit Committee Council (ACC), an independent advisory group of audit committee members and chairs, submitted a comment letter to the PCAOB outlining three key recommendations for boards to consider when developing priorities. The council highlights the improvements needed. Inspection programs, regulatory efficiency and durability, and prioritization of efforts.
Keep reading to learn more about each recommendation.
1. Strengthen the PCAOB inspection program
At the top of the ACC's list is improving the focus, consistency, and timeliness of PCAOB inspections, a key touchpoint for audit committees and accounting firms.
A more risk-based, quality control-oriented approach would provide audit committees with more meaningful information about company-level performance and encourage greater attention and investment where needed. These changes will also help reduce pressure on engagement teams, increase accountability at leadership level, and support enterprise continuity.
The ACC also calls for clearer differentiation of the relative severity of findings in inspection reports to increase their usefulness to stakeholders. Audit committees are interested in high-severity findings, but the current format does not provide such clarity. Developing a framework for assessing the severity of audit deficiencies will improve the consistency and usefulness of the results.
2. Promoting regulatory efficiency and durable standards
Consistency in the interpretation and application of PCAOB rules and auditing standards is essential This leads to permanent improvements in audit quality. The ACC's letter encourages boards to continue to assess whether regulatory actions are providing benefits commensurate with the costs to investors, issuers, auditors, and audit committees.
The Board strongly supports a model in which interpretations are developed through a standard-setting function (with appropriate transparency), rather than through inspection or enforcement. This reduces uncertainty and improves audit quality by clarifying expectations from the beginning.
For example, the SEC's long-standing consultation and pre-approval process supports a unified understanding of accounting standards and is highly valued by issuers and audit committees. The PCAOB requires a similar process. ACC welcomes and supports Chairman Logothetis' announcement to design such a formal consultation process within the Office of the Chief Inspector (where standard setting exists).
It is also important for boards to assess whether regulatory actions provide benefits relative to costs for investors, issuers, auditors, and audit committees. Regulation must strike a balance between providing meaningful investor protection and avoiding unnecessary documentation and compliance burdens. This helps ensure that the audit committee reviews only material matters and information that is useful for decision-making.
One area for improving efficiency is eliminating duplicative oversight between the SEC and the PCAOB. This causes confusion and lack of consistent application across companies. The ACC encourages the PCAOB to consider opportunities to reduce duplicative regulations to increase clarity and efficiency while maintaining investor protection. This consistency is essential for consistently improving audit quality over time.
3. Prioritize initiatives that have the greatest impact
High-quality financial reporting is supported by regulatory structures that foster common understanding and expectations among all stakeholders, especially during times of change. Too broad an agenda risks overstretching the PCAOB's resources and creating confusion for companies and audit committees.
ACC recommends disciplined sequencing, tackling the most impactful initiatives first. These should include projects that most closely align with the PCAOB's investor protection mission. It was therefore good news when Chairman Logothetis announced at the Standards and Emerging Issues Advisory Group meeting on May 6, 2026, that for the first time the Board would be issuing a public consultation document to seek input on the standard-setting agenda. This is an approach also taken by other regulators, such as the Financial Accounting Standards Board (FASB).
For the future
Audit quality is not achieved in isolation. It depends on rigorous inspection programs, enduring standards, and a sharp focus from regulators on what underpins confidence in capital markets. For more information on ACC's recommendations, read the full comment letter here.
