Statement at the Fall 2026 Investor Advisory Group Meeting

The following remarks were presented by Board Member George R. Botic in his official capacity as a PCAOB Board member, but the remarks are Board Member Botic’s own and do not necessarily reflect the views of the full Board, other Board members, or the PCAOB’s dedicated staff.

Remarks as prepared for delivery 

Thank you, Chairman Logothetis.

Good morning, and I also want to welcome all the Investor Advisory Group (IAG) members to the fall meeting. Thank you all for being here. Your time, engagement, and contributions are critically important in helping the PCAOB keep its eye on the ball: protecting the interests of investors and the public interest in high-quality audits of public companies’ financial information.   

The agenda for today allots thirty minutes to an update from our staff regarding our inspections of registered non-U.S. firms. Our non-U.S. inspection activities, including our ongoing collaboration with international regulators, is a vital part of the PCAOB’s work, all led and carried out by the highly capable and dedicated staff in our Office of International Affairs and our Division of Registration and Inspections.

The agenda also allots thirty minutes for us to hear from you about the results of your efforts, for the third straight year, to identify the most decision-useful critical audit matters and key audit matters described in audit reports included in Form 10-K and Form 20-F filings. I applaud the IAG for continuing this important work, and I thank Jeff Mahoney for his on-going leadership on it.

I look forward to both of those discussions.

First up on the agenda, though, is three hours of sessions devoted to the topic of contemplated changes to our approach to inspections. I hope those sessions will be lively and productive.

With our new quality control standard, QC 1000, “A Firm’s System of Quality Control,” set to take effect, a related reset of aspects of the inspection program is obviously important. At the same time, although unrelated to quality control issues, our approach to making inspection information public can also benefit from a fresh look. And, of course, although this is perhaps less a topic of detailed discussion for today, we should always be working aggressively to incorporate leading edge technology in our inspection work to the extent, and at the speed, that we responsibly can.

I do want briefly to offer a thought about an aspect of the inspection program that has been identified for possible change, but that I think may be better to preserve essentially as it is.

As you know, the Sarbanes-Oxley Act requires that each PCAOB inspection include review of a selection of the firm’s audits “performed at various offices and by various associated persons of the firm.”¹ In my view, the PCAOB’s longstanding approach to selecting and reviewing audits, and focus areas of those audits, has likely contributed more to generating and sustaining improvements in audit quality than has any other PCAOB activity. As transformation of the inspection process continues to be contemplated, I have become concerned when I hear suggestions for changing the approach to that aspect of inspections.

I am, of course, all for identifying ways to improve the effectiveness of our inspections in causing and sustaining improvements in audit quality. With respect to changing our audit selection and review process, though, I am concerned that changes may occur without sufficiently focused discussion; specifically, discussion that squarely addresses the risk of diminishing the effectiveness of the process and that transparently weighs that risk against the perceived trade-off value of any suggested alternative. To my thinking, the value of the process does not lie in merely touching a similar number of audits as inspections historically have done but lies in how those audits are selected and how the inspection touches them. I do not know to what extent today’s discussions may be framed to elicit your thoughts on that issue. I encourage you, however, to keep the issue in mind during the sessions.

Again, thank you for being here and for your commitment to engagement with us. I look forward to your comments, insights, and questions throughout the day.