Supplemental Request for Comment: Proposed Amendments to QC 1000, A Firm's System of Quality Control

Remarks as prepared for delivery

Good morning.

Today, the Board is voting to issue a Supplemental Request for Comment on proposed amendments to QC 1000, A Firm’s System of Quality Control. I want to take a few minutes to share how the standard came about, what staff is proposing today, and what it means for the future of audit quality oversight.

A Foundational Standard and a Responsibility to Get It Right

QC 1000 is one of the most consequential standards that the Board has adopted since it came into existence 23 years ago. It establishes the framework by which a registered firm designs, implements, and operates its system of quality control—the foundation that underpins the reliability of each of the firm’s audit reports.

Audit quality rests on the systems, culture, and accountability structures that make it possible—and QC 1000 is the standard that governs them.

QC 1000 was adopted by the Board in May 2024 and then approved by the SEC in September 2024. It represents a generational shift—from interim quality control standards to a modern, risk-based, and integrated quality management framework.

Nothing we are doing today changes this trajectory.

Investor protection and audit quality remain the PCAOB’s enduring North Star, and the Board’s responsibility to get a standard right does not conclude with their vote to adopt it.

The Profession at an Inflection Point

This responsibility is especially urgent now, because the profession is undergoing structural transformation.

Private equity is entering the profession at an accelerating pace. We need to understand how firms operating under alternative practice structures are allocating capital, managing the inherent pressures of return expectations, and maintaining the independence and professional judgment that auditing demands.

Consolidations are reshaping the market—firms are merging, combining practices, and blending methodologies, cultures, and business models. How they manage integration— that is, how they harmonize quality control systems, align their operations with professional standards, and ultimately preserve audit quality—is going to be important.

Technology is transforming how companies operate, how auditors work, and what investors expect. The world around us is changing before our eyes. And a modern, well-calibrated quality control standard—inspected rigorously and consistently—is our most powerful tool for ensuring that these structural changes do not come at the expense of the investors who rely on audited financial statements to make informed decisions.

This is why QC 1000 matters, and getting it right is not optional.

QC 1000-Focused Inspections

For too long, the model of oversight at the PCAOB has been largely reactive. Importantly, however, I am confident that a quality control-focused inspection approach is the key to becoming a more proactive regulator.

When we inspect at the quality control level, we are not only looking at whether an audit was performed appropriately. We are evaluating whether the system—the governance, culture, risk assessment, monitoring, and remediation—is functioning in a way that consistently produces high-quality audits.

Oftentimes, engagement-level deficiencies are the downstream consequence of quality control issues. Inadequate resourcing, training gaps, supervision failures, insufficient risk assessments, and a tone at the top that does not prioritize audit quality are all systemic issues requiring systemic oversight.

Inspecting at the quality control level allows the PCAOB to hold firm leadership accountable, not just for individual audits, but for the environments they create and the systems they maintain. This is a fundamentally different posture than simply reviewing a non-statistical sample of completed audits. It means working directly with firms to promote audit quality at the front end, which should help to mitigate inspection findings on the back end.

We hope to begin piloting a QC 1000-focused inspection approach next year with a full rollout in 2028. But we can only do that effectively if the final standard is workable, clear, and commands the confidence of the firms that must implement it.

Leading With Purpose

Which brings me to why we are here today.

Since the SEC approved QC 1000 in September of 2024, our staff have engaged in  extraordinary efforts to support the standard’s implementation: publishing a variety of guidance, resources, and knowledge checks, hosting workshops in-person and virtually,  meeting with firms of all sizes, and working through the feedback provided by the members of the Smaller Firm Resource Group. Through this work, and through comment letters submitted to both the SEC and the PCAOB, a consistent set of themes emerged.

Firms told us that certain provisions of the standard were unclear in their application, and some requirements were driving higher costs than anticipated without commensurate benefits to audit quality. Additionally, some provisions were unnecessarily prescriptive in ways that created real operational challenges.

To their credit, investor groups did not object to providing additional time for implementation. But they rightly cautioned us against using any delay as a pretext for broader revisions or withdrawal of the standard.

We have heeded that caution.

What staff is proposing today is not a retreat from QC 1000 or a reopening of the entire standard. Staff is proposing narrow, targeted amendments designed to address the specific challenges that firms have identified. Additionally, throughout this release, staff discuss the other options evaluated, the trade-offs weighed, and the specific questions commenters are being asked to address.

I believe that the targeted amendments strike the right balance to:

1. Reduce unnecessary burden;
2. Increase flexibility and alignment with global standards; and,
3. Sharpen the focus on what matters most for audit quality.

The Path Forward

I want to close on a personal note.

I have dedicated my career to the auditing profession, and it has been profoundly rewarding. I find comfort in knowing that many of the accounts who perform audits, who pore over financial statements, who challenge assumptions, and who stand behind their work with a great deal of pride, want to get it right. 

I had the privilege to perform, oversee, and lead this work, over decades of practice. I also had the opportunity, earlier in my career, to work closely with boards and audit committees across major global clients, and more recently, to serve on and lead audit committees. This experience provided me with a deep appreciation for the role auditors and audit committees play to protect investors and strengthen trust in the capital markets.

This moment calls for someone who understands the craft that is auditing. Someone who knows what drives audit quality and what undermines it. And someone who can engage with the profession, with the credibility and knowledge to hold it to the highest standard.

When my time as Chairman is over, I will view my service as successful if the PCAOB is set to succeed for another 25 years and beyond.  

I believe the proposal before us today is a step in the right direction.

Closing

I urge all stakeholders—investors, audit committees, preparers, auditors, academics, and the public—to provide us with your feedback.

I would like to recognize and thank all the staff from across the PCAOB’s Divisions and Offices who have contributed to today’s proposal, especially Barbara Vanich, Jessica Watts, Karen Wiedemann, Ekaterina Dizna, Linnette Klinedinst, David Ellam, Schyler Simms, Carla del Monico, and Kevin Lombardi in the Office of the Chief Auditor; Erik Durbin, Nick Galunic, and Zoey Xie in the Office of Economic and Risk Analysis; and Matt Goldin, Drew Dropkin, and Jennifer Gurzenski in the Office of the General Counsel.

I also thank my fellow Board Members for their collaboration; Brent Simer, Anita Doutt, and Danette Edwards from my team; and the staff from the SEC’s Office of the Chief Accountant.