Balancing Audit Quality and Investor Protection Through Common Sense, Proportionate Amendments to QC 1000

Remarks as prepared for delivery 

Good morning. Before I begin, I want to thank Dominika Taraszkiewicz, Jessica Watts, Karen Wiedemann, Ying Compton, Erik Durbin, Nick Galunic, and their teams—Ekaterina Dizna, Linnette Klinedinst, Schuyler Simms, Carla Del Monico, Kevin Lombardi, and Zhoudan (Zoey) Xie—for their tremendous work on the recommendation before us today.

I am pleased to support the targeted amendments to QC 1000. I support the amendments to QC 1000 based on both the merits and the process that led us here today. The record developed through the PCAOB’s implementation outreach and the supplemental request for comment supports adopting these amendments. Good regulation does not end at adoption; it requires ongoing review, practical judgment, and a willingness to make targeted changes when the evidence shows they would better serve audit quality.

Before discussing the amendments, I want to acknowledge the thoughtful and substantial work that supported the Board’s original adoption of QC 1000. That action was grounded in a substantial record and reflected a careful effort to strengthen firms’ quality control systems. The amendments before us today do not diminish that work. Instead, they reflect the Board’s commitment to evidence-based regulation. They show that the Board is evaluating how its standards operate in practice and making appropriate, targeted adjustments when implementation experience identifies a more efficient path to achieving our objectives.

Implementation experience provided a clearer picture of QC 1000’s real costs, including not only dollars, but also the time and professional attention firms devote to compliance. Where our implementation experience shows costs can be reduced without weakening audit quality, we should make targeted refinements. I believe these amendments reflect that common-sense approach.

I believe the amendments appropriately recalibrate aspects of QC 1000 where the record shows that costs can be reduced without weakening audit quality.

Let me highlight two aspects of QC 1000 where I believe these amendments will have the greatest impact.

The first aspect involves QC 1000’s “design-only” requirements for audit firms that do not audit U.S. issuers or SEC-registered broker-dealers. I fully support the amendments to rescind that requirement. They eliminate the obligation for firms with no U.S. issuer or broker-dealer audits to design and document a QC 1000-compliant quality control system. Reducing those barriers may make it easier for smaller firms to register or remain registered with the PCAOB. It also may make it easier for qualified firms to enter the public company and broker-dealer audit markets when they have the competence¹ to do so responsibly. That approach supports a more robust and competitive audit marketplace while protecting the interests of investors in the preparation of informative, accurate, and independent audit reports.²

A second aspect involves the interaction between QC 1000 and quality management frameworks already in use abroad. Stakeholders raised practical concerns with real cost implications, including the requirement that all firms use the same quality control evaluation date.

Many foreign firms operating under ISQM 1 often use different evaluation dates for operational and regulatory purposes. Requiring a single QC 1000 evaluation date could force firms to maintain parallel compliance processes, increasing costs without a corresponding improvement in audit quality.

I support adopting the amendments because they improve alignment without sacrificing audit quality. They give firms flexibility to select an evaluation date that best fits their operations and circumstances. The amendments also better align QC 1000 system evaluation conclusions with other quality management standards, while maintaining QC 1000’s principles-based approach.

These amendments also illustrate a broader point: adoption is not the end of the Board's work. Successful implementation will require continued engagement, oversight, and refinement. Continued dialogue with stakeholders will be critical to ensure that QC 1000 delivers meaningful benefits for audit quality.

As we move from adoption to implementation, clarity is essential. Commenters requested additional implementation guidance, and the OCA staff recently published updated frequently asked questions.³ If the requirements of QC 1000 remain hard to understand or unclear, I hope firms will use our new process and request a consultation with our Office of the Chief Auditor.⁴

I believe the targeted amendments to QC 1000 reduce unnecessary costs while preserving the audit quality and investor protections the U.S. capital markets depend on.

I am pleased to vote in support of their adoption today.