The Importance of the Investor Advisory Group’s Input as the PCAOB Charts Its Course

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 

Good morning, and thank you, Chairman Logothetis. I also want to thank the Investor Advisory Group (IAG) co-chairs, Saba Qamar, the PCAOB’s Investor Advocate, and Amy McGarrity for their leadership. We would not be here today without your efforts, continuing dedication to the IAG, and engagement with investors. I want to welcome all the IAG members, and in particular the new members joining us for the first time. I welcome your contributions and engagement. Your voice is critically important to inform the Board and staff. 

Like the accounting profession, the PCAOB is in a period of self-assessment, and three of today’s sessions bear directly on charting our future course: Inspections and Inspection Reporting; Artificial Intelligence (AI); and the PCAOB’s strategic priorities. I am very much looking forward to the discussion surrounding these topics and hearing views and perspectives from those around this table. The IAG’s input has long been of immense value to the PCAOB. Our discussions here are not about abstract issues but address current topics of practical import. You bring to the table years of working to understand and advance the interests of users of audited financial statements, and I am confident that your insights will help us chart a course on those topics.

As we chart that course forward, your input can help keep us grounded in the PCAOB’s core mission, which, simply put, is to do what is within our power to cause financial statement audits to be performed in a way that merits investor and public trust. The PCAOB’s mission - “to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports,”¹ - reflects a powerful truth: investor confidence is the engine of our capital markets. When investors can trust financial statement audits, capital flows more efficiently. When that trust diminishes or erodes, markets become more costly and volatile. Audit quality matters because it promotes that trust. And in the wake of a string of failures that revealed investors to be at greater risk from a self-regulated accounting profession than many people realized, Congress created the PCAOB to address that problem and help restore the necessary trust.

The dialogue today will focus on topics that directly affect our programs and activities. In particular, I look forward to hearing IAG members’ perspectives on our inspection program, which is at the heart of our mission. I am interested in your views on what, if any, changes to our inspection program we should consider - or should avoid - and why.

I am also keenly focused on the impact of AI throughout the financial reporting ecosystem, and I am interested in hearing the perspectives of the three panelists in the session moderated by Gina Sanchez. As we read nearly every day, the impact of AI is likely to be significant and disruptive for both preparers of financial statements and their auditors. One area of specific interest is how auditors’ use of AI may affect investors’ confidence in the audit, and whether there are types of disclosures about that use that would be of value.

Before concluding, I want to applaud the IAG, and specifically Jeff Mahoney for his leadership, for continuing the focus on critical audit matters (CAMs). This will be the IAG’s third year requesting that the public submit CAMs and key audit matters (KAMs) contained in public company audit reports included in Form 10-K and Form 20-F filings. The process the IAG goes through to review the submissions and select the most decision-useful CAMs or KAMs represents a significant and valuable contribution that benefits stakeholders across the financial reporting ecosystem.

In conclusion, thank you for your commitment and willingness to engage with the PCAOB, and I look forward to your comments, insights, and questions throughout all of the day’s sessions.