Engaging with Audit Committees and Other Stakeholders Earlier and More Often

Remarks as prepared for delivery

Thank you, Vanessa.  It is a pleasure to be here with you today.    

I’ve worked at the PCAOB for almost five years and began serving as a Board member on February 10, 2026.  This is an exciting time at the PCAOB as we work to transform our organization into a more modern regulator that makes better use of technology and pursues continuous improvement to advance our investor protection mission. I see change happening throughout our organization, improving the way we do things both externally and internally. I will talk about some of the changes particularly important to audit committees that I believe will help us avoid mistakes of the past.

But first, let me say that my remarks today reflect just my views, and not necessarily those of the full Board, other individual Board members, or PCAOB staff.

PCAOB Chairman Logothetis recently noted that the PCAOB should not be “a black box,” and has emphasized the importance of increasing stakeholder engagement.¹ I believe the PCAOB has begun delivering on that commitment over the past 8 months. For example, on June 23, 2026, the PCAOB issued its first-ever request for public comment on what the PCAOB’s standard-setting, research, and rulemaking agendas should include.² The PCAOB received 35 comments in response.³ The CAQ submitted a 12-page comment letter,⁴ including a recommendation to amend the standard often described as “Noncompliance with Laws and Regulations” or “NOCLAR.” NOCLAR generally refers to PCAOB standards that describe an auditor’s responsibility to consider a company’s noncompliance with laws and regulations, including fraud, in an audit. The CAQ also expressed support for a “conceptual framework for standard-setting” to guide the PCAOB’s standard setting process.⁵ Finally, the CAQ recommended, among other things, that the PCAOB “seek opportunities to enhance stakeholder engagement early in the standard-setting process,” with “early input from practitioners and other stakeholders” to “help identify operational challenges, implementation challenges, and unintended consequences.”⁶ 

So, how did the PCAOB respond to the CAQ and the other comment letters? To put it another way, did we listen? I believe the answer is an unequivocal yes.  Specifically, on September 30, 2026, the PCAOB updated its agendas reflecting the Board’s current priorities and stakeholder feedback, which included NOCLAR on its standard-setting agenda.⁷ The PCAOB also noted that it “is developing a conceptual framework for standard setting to promote transparency, consistency, and efficient use of our resources.” The agenda notes that “[d]evelopment of the conceptual framework will be conducted in parallel with the above standard-setting and research projects.”⁸ 

So now, I would like to share with you my views on the conceptual standard setting framework I would apply, perhaps on a pilot basis, to amending NOCLAR.  By way of background, the PCAOB proposed for public comment amendments to NOCLAR on June 6, 2023. The Board approved the proposal by a 3-2 vote with both CPA Board Members dissenting.  Former Board Member Christina Ho voted ”no,” stating that the proposed NOCLAR amendments “contain a breathtaking expansion of the auditors’ responsibilities,” which “could cause considerable confusion on the appropriate role of auditors, undermine the time-tested accountability framework, and reduce the resilience of the already highly concentrated audit marketplace.”⁹ As you may recall, the NOCLAR proposal proved to be controversial with strong opposition from the audit profession, public companies (including their audit committees¹⁰), and lawyers. At a December 2023 hearing before Congress, the PCAOB committed to holding a public roundtable to do further outreach.”¹¹ The public roundtable took place on March 6, 2024;¹² however, the PCAOB never adopted or re-proposed amendments to NOCLAR.      

With the benefit of hindsight, what are the lessons learned and what process would I follow as the PCAOB again considers amending NOCLAR? Instead of hosting a roundtable of stakeholders after publishing proposed amendments, I would instead convene a small stakeholder working group of 10 members before publishing proposed amendments. This working group would consist of practitioners from large, mid-sized, and smaller firms as well as at least one financial statement preparer, one investor, and one audit committee chair or member. The PCAOB would provide the working group with the text of draft NOCLAR amendments to, in the words of the CAQ comment letter, “identify operational challenges, implementation considerations, and unintended consequences.” Discussions with the working group would be kept confidential, because it would allow working group members to speak more freely and to respond more candidly to the ideas of others. However, the draft amendments shared with the working group would be made publicly available on the PCAOB’s website. The goal of this approach would be, in the words of the CAQ comment letter, to issue “more informed and effective proposals.”¹³   

So, the lesson learned from the 2023 NOCLAR proposal is to engage stakeholders, including audit committees, earlier in the standard setting process in order to prepare a more informed and effective proposal for public comment. Consistent with the conceptual framework for standard setting, this approach promotes transparency. But does it advance the conceptual framework’s goal of being an “efficient use of [PCAOB] resources?” I believe it will. Engaging with stakeholders more robustly on the front end – before we propose amendments for public comment – will likely produce a better proposal that takes less time to finalize on the back end. At a minimum, I believe the PCAOB should explore this idea of a ten-member working group on at least a pilot basis. 

The PCAOB avoided adopting ill-advised amendments to NOCLAR in 2024 due in part to feedback from audit committee members. At least one of the audit committee chairs we spoke to is currently serving on the CAQ’s Audit Committee Council.¹⁴ Across the board, audit committee member feedback and insights are especially important to us. As you know, federal securities laws make the audit committee directly responsible for the company’s independent auditor, including the selection of the auditor, their compensation, and oversight of the work.¹⁵ For this reason, the PCAOB and audit committees share a mutual interest in driving audit quality through the oversight of external auditors. 

In 2025 alone, PCAOB staff gathered insights from more than 250 audit committee chairs about the issues concerning them.¹⁶ Insights from this cohort, as well as insights from previous years, are available on our website in a publication called “Spotlight.” One thing we’ve learned from interviewing audit committee members and auditors is that the PCAOB can do a better job making its inspection reports useful, a criticism we are taking to heart as we modernize our inspection program. I encourage you to look at the 2026 Spotlight on audit committees. I anticipate talking about some of the insights from this Spotlight later in the hour.

The PCAOB’s research staff is also interested in audit committees. We announced two weeks ago a new research project focusing on communication between audit committees and audit firms, such as communications required under AS 1301.¹⁷ This research may inform future revisions to our rules and standards. If you have thoughts on this research project or more generally how the PCAOB can be useful to you, drop me a line. My email address is [email protected].

With that, I look forward to my conversation with Vanessa and Sara.