Statement at the Fall 2026 Standards and Emerging Issues 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, and good morning all.

At the outset, I would like to take a brief moment for reflection on the recent passing of former PCAOB Board Member Steve Harris. Steve lived a life of purpose, guided by a commitment to public service and a deep belief in the importance of protecting investors. He made extraordinary contributions to financial regulatory policy throughout his career, and in his nearly ten years as a PCAOB Board member – the longest any one has served as a Board member – Steve helped shape the organization and keep its focus firmly on the public interest. Those of us who knew Steve personally will remember vividly the person behind those accomplishments: principled and determined, while unfailingly kind and warm, and always looking to find common ground. Steve gave generously of his time, his wisdom, and himself, and I, for one, am better for having known him.

Turning to the business at hand, I want to welcome all the Standards and Emerging Issues Advisory Group (SEIAG) members to the fall meeting. Thank you all for being here. I have long believed that the PCAOB should be, among other things, a marketplace of ideas, and from that perspective, the gatherings and engagement of this group never disappoint.

The agenda for this morning allots an hour to a discussion of a conceptual framework for standards setting and an hour to discussion of considerations related to fraud. Both are important topics and worthy of this group’s engagement. Previous SEIAG discussions have addressed matters related to fraud, and I am glad that it remains a focus. I am particularly interested in discussion of whether we should revise the critical audit matters (CAMs) criteria to require communication of matters related to fraud risk or suspected fraud.

The afternoon agenda is devoted to the topic of contemplated changes to our approach to inspections. I hope and expect that the discussion will be as lively as the discussion on that topic at last week’s meeting of our Investor Advisory Group (IAG).

As I said at that meeting, some degree of a reset of our inspection program is plainly appropriate in light of the imminent effectiveness of our new quality control standard, QC 1000, A Firm’s System of Quality Control, and a fresh look at our approach to making inspection information public could also be beneficial. In addition, we should always be working to incorporate technological advances in our inspection work to the extent, and at the speed, that we responsibly can.

I do want briefly to echo a comment I made at the IAG meeting concerning 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 have been 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 encourage you to keep that issue in mind during the sessions.

Again, thank you for being here and for your commitment to engagement with us. I look forward to today’s discussions.