Putting the PCAOB on a Sustainable Path that Improves Audit Quality and Protects Investors

Remarks as prepared for delivery 

Thank you, Mr. Chairman.

It is the honor of a lifetime to serve on the PCAOB Board.  As a new Board Member, I will be  guided by four principles:  (1) I am committed to the rule of law; (2) my North Star is the PCAOB’s statutory mission of investor protection; (3) we can best achieve that mission by helping to improve audit quality; and (4) our success is tied to the PCAOB staff and the work they do as well as thoughtful, continuous engagement with our stakeholders.

Before joining the Board, I served at PCAOB for more than four years, including when the PCAOB issued its 2022-2026 Strategic Plan. Much has happened since then. With the benefit of hindsight, I believe we implemented the Strategic Plan with a short-term focus that lacked moderation, putting PCAOB’s triad of programs -- standard setting, registration and inspections, and enforcement – on an unsustainable path. I believe that unsustainable path contributed to the legislative effort that would have resulted in the PCAOB’s functions being absorbed into the Securities and Exchange Commission (SEC). It is time to change course.

My goal for the 2026-2030 Strategic Plan is to help put the PCAOB on a more stable path – a path that endures over time.  To accomplish this, I believe that the PCAOB must pursue moderation in its programs and incorporate moderation into the Strategic Plan. This means forgoing short-term, ephemeral gains in favor of long-term, durable success. 

I might also make my point this way, now that the major league baseball season is underway:  the PCAOB should focus on hitting singles and doubles – that is, make continuous, tailored improvements in our standards that advance audit quality -- instead of our previous approach of trying to hit home runs.  One might ask what’s wrong with home runs?  The problem with trying to hit home runs is that there is a greater likelihood of striking out, of wasting effort with no concrete improvements that advance audit quality.

For example, our 2022-2026 Strategic Plan refers to having one of the most ambitious standard-setting agendas in PCAOB history.  To advance this Plan, in 2023, the PCAOB proposed amendments to auditing standards related to a company’s noncompliance with laws and regulations or “NOCLAR.”  The proposal was approved by a 3-2 vote with both CPA Board Members voting “no.” Former Board Member DesParte stated that while “[m]any of today’s proposed enhancements are positive,” “this project is one of 14 on our ambitious standard-setting agenda. . . . As we proceed one-by-one, I am increasingly concerned we are establishing new auditor obligations and incrementally imposing new auditor responsibilities in ways that will significantly expand the scope and cost of audits, and fundamentally alter the role of auditors without a full and transparent vetting of the implications . . . .”¹ 

The PCAOB “struck out” on NOCLAR because none of the proposed NOCLAR amendments were adopted.  If the PCAOB had taken a more moderate approach, the amendments that Mr. DesParte referred to as “positive” might have been adopted years ago.

Now, the PCAOB did not strike out on every standard setting project.  In some cases, it made contact, but due to base running errors it stranded runners in scoring position.  For example, in May 2024, the PCAOB adopted amendments to its quality control standards – QC 1000 - by a 4-1 vote, with an effective date of December 15, 2025.  In her dissenting statement, former Board Member Ho noted that while “we need a robust and modernized quality control standard . . ., we must do it right, and not rush to replace an outdated standard . . . .”² These words proved prescient.  In August 2025, the PCAOB filed with the SEC a proposed change to delay the effective date by a year, because “some firms have encountered implementation challenges that may, as a practical matter, be insurmountable within the established time frame.”³ In my opinion, if the PCAOB had taken a more moderate approach with QC 1000, the one-year extension would not have been necessary, and modernized quality control standards would be in effect today.

Once again, I am proud to serve on the PCAOB Board and I want to help make the PCAOB’s triad of programs as efficient and effective as possible.  As we begin formulating our next Strategic Plan, I hope we learn from the past and pursue a moderate path that will deliver durable and lasting results that improve audit quality for the investors we are sworn to protect.

Back to you, Mr. Chairman.