Kurt Hohl, the SEC’s Chief Accountant, shared insights on current SEC and Public Company Accounting Oversight Board (PCAOB) developments at the American Institute of Certified Public Accountants 2025 Conference in December. Hohl highlighted the vital role the PCAOB plays in the capital markets ecosystem by promoting audit quality and supporting investor confidence.
While audit firms have made significant efforts to improve audit quality in recent years, Hohl points out that both the PCAOB and audit firms are affected by innovation and the evolving business environment.
He stated, “For example, we will encourage the PCAOB to take a fresh look at its inspection process, particularly in light of new quality control standards, and to consider whether inspection reports are providing meaningful information to stakeholders.” Hohl went on to suggest that the PCAOB consider whether shifting its inspection process toward a review of a firm’s system of quality management, corroborated by engagement-level reviews, would provide more relevant information about audit quality.
He said that doing so may shift accountability upstream to audit firm leadership, where many drivers of audit quality originate. Such a model could serve as a blueprint globally and allow for a more consistent metric to evaluate firm performance.
Regarding standard-setting, Hohl said he believes the PCAOB should consider additional transparency in its standard-setting process. One example cited was adopting an agenda consultation process to solicit public comment on projects for which both an identifiable problem and feasible solutions exist.
From an international perspective, the SEC’s Office of the Chief Accountant also supports further alignment between the auditing and assurance standard-setting activities of the PCAOB and International Auditing and Assurance Standards Board (IAASB). Hohl stated that alignment of auditing standards, to the extent possible, would greatly reduce risk bypromoting greater consistency among auditors across the globe.
Lastly, Holh noted that the PCAOB could do more to be responsive to the needs of registered firms. For example, the PCAOB could consider establishing a structured consultation process to address questions related to the audit of standard interpretation. Such a process could further enhance audit quality, help avoid unnecessary inspection findings, and foster a more collaborative regulatory environment.