From Insights to Impact: The Investor Advisory Group Provides an Investor’s Prospective to the PCAOB

Remarks as prepared for delivery

Good morning. It is great to see everyone in person and thank you, Saba [Qamar], for the kind introduction and for providing an overview of the day’s events. I also want to thank you, Amy [Copeland McGarrity], for your service as Co-Chair of the Investor Advisory Group (IAG) and to all the IAG members for being here today. 

Since the inaugural IAG was established in 2009 under the leadership of former Board Member Steve Harris, the IAG has long served a specific purpose for the PCAOB Board and staff. Your input, perspectives, and experiences are critical in helping the PCAOB meet its mandate of protecting investors under the Sarbanes-Oxley Act, and I want to thank all of you for volunteering your time and energy on behalf of investors. 

We recognize the time devoted to the IAG’s work is precious, given your many other responsibilities and duties, and we do not take for granted your commitment to the PCAOB.

Before I proceed, please know that my remarks this morning reflect my individual views as an individual PCAOB Board Member, and do not necessarily reflect the views of the full Board, my fellow Board Members, or the PCAOB’s dedicated staff. 

From individual and collective letters of support for the PCAOB’s unique and necessary mission to protect investors, to supporting and uplifting the work of our incredibly talented staff, the IAG was an incredible source of support for the PCAOB this year.

This is, in no way, a surprise as the IAG has always been a champion of the PCAOB and our investor protection mission.

In fact, I would submit that the IAG is woven into the very fabric of the PCAOB.

Speaking at an IAG meeting in October 2016, former PCAOB Chairman Jim Doty summarized the accomplishments of the PCAOB and gave credit to the investor community when he said, “The PCAOB has accomplished a great deal in its short life of less than 14 years so far, including some major achievements. But they could not have been accomplished without the sustained interest and support of investors...”

Although we are nearly ten years removed from Chairman Doty’s statement, it still rings true.

At its core, I believe the PCAOB is, and must be, a listening organization.

We must not only continually engage with our stakeholders but, more importantly, we must actively listen to all of our stakeholders.

For example, just last week, Board Member Thompson hosted the latest PCAOB Small Business and Broker-Dealer Forum in Irving, Texas, which underscores the PCAOB’s listening commitment to the unique experiences and perspectives of smaller firms. And our colleagues in the Office of the Chief Auditor recently formed the Small Firm Resource Group, bringing together representatives from smaller firm practices to share their firsthand perspectives with us.

In that same vein, the IAG was formed to provide a public forum for the Board and staff to hear from the broad investor community on auditor oversight matters that affect and are of importance to investors. 

It is outlined explicitly in Sarbanes-Oxley that the PCAOB was created "to oversee the audit of public companies … in order to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports."

In fact, it was the law’s namesake, U.S. Senator Paul Sarbanes, who said five years after the Act’s passage that, “If you don’t protect the interests of the investors, it deals a major blow to the workings of the economic system...Investors, after all, make the whole thing work. They are the ones who are providing the resources so the entrepreneurial system can move forward, innovate, expand, and contribute to the strength of the economy.”

For many years, the IAG has faithfully reported the perspectives of investors and served as the connection to, arguably, the PCAOB’s most important constituency—investors—the ones who, in Senator Sarbanes words, “make the whole thing work.”

We are and continue to be grateful for all that you do.  

During my 22 years at the PCAOB, I have witnessed and experienced firsthand the value that the IAG brings to the PCAOB by raising important issues concerning investors. In my prior position as the Director of the Division of Registration and Inspections (DRI), I recall many interactions with the IAG regarding our inspection activities. These discussions caused me to think and reflect more deeply on our work in new ways.

Today, you will continue this incredibly important role with a discussion moderated by IAG Co-Chair Amy McGarrity and IAG member Gary Walsh on valuation practices for private assets, which is a timely and important topic for investors right now.

Dr. Josh White, Acting Director of the Office of Economic and Risk Analysis (OERA), will lead the conversation on recent Congressional testimony regarding the requirements for audits of internal controls of financial reporting (or ICFR).

I am also looking forward to hearing more about the IAG’s selection regarding the most decision-useful critical audit matter (CAM) or key audit matter (KAM) contained in public company audit reports from the preceding filing year.

Like you all, I speak frequently about the importance of transparency—both from the standpoint of investors, firms, audit committees, and other stakeholders having a clear view of the PCAOB’s activities and areas of focus, as well as from the standpoint of capital market participants, who want more insight into the audit process. CAMs are integral to investors gaining an enhanced understanding of the audits that are performed for their benefit.

I want to specifically thank Jeff Mahoney for leading this important initiative for the second year—and all that were involved in this significant endeavor.

Given the worldwide nature of auditing, it’s only fitting that Christine Gunia and Juli Ravas in the Division of Registration and Inspections (DRI) will provide more information on our non-U.S. inspection activities, as well as our ongoing collaboration with international regulators. Our regime of joint inspections with non-U.S. regulators ensures that registered accounting firms performing audits on U.S. publicly listed companies are all held to the same standards and rules as accounting firms located in the U.S.

We have a full agenda today, but before we turn to the matters at hand, I want to acknowledge the PCAOB’s decision to postpone QC 1000’s effective date for one year to December 15, 2026, after learning that some firms faced implementation challenges meeting the previously established timeline. The Board believes that an additional year is sufficient time for firms that have encountered implementation challenges to overcome those challenges. Additionally, firms can also begin complying with the requirements of QC 1000 before the new effective date if they wish to do so.

Given the importance of a firm’s system of quality control to the performance of high quality audits, it is vital that firms are successful in properly implementing the new standard because that means investors are better protected.

As I conclude, I want to share an update on our 2025 inspection activity: While our 2025 inspection procedures for the six U.S. Global Network Firms  are still underway, preliminary results show a decrease in Part I.A. deficiency rates from 2024. This early data suggests that the efforts by these firms during the past few years are positively impacting audit quality. 

I would like to close my remarks by reflecting on the very first IAG meeting in 2010, when Board Member Steve Harris said, “Throughout today's meeting, I would ask that each of you keep in mind, and seek to answer the question, "How do we make audits more relevant to investors?”

This question is as relevant today as it was in 2010. 

I, too, would encourage all of us to continue thinking about that question and how we each can strive to make audits more relevant to the investor.

And again, I want to extend my deepest gratitude for all the IAG does—and will continue to do—on behalf of the PCAOB. I look forward to an engaging day of discussion and dialogue.

I will now turn it over to my fellow Board Members if they would like to say a few words. After that, we will open it up for your questions or comments.