Guided by Mission To Protect Investors, PCAOB Approves 2025 Budget

At an open meeting held today, the Public Company Accounting Oversight Board (PCAOB) approved its fiscal year 2025 budget, guided by its 2022-2026 Strategic Plan and the Board’s investor-protection mission.

"The PCAOB continues to execute its strategy in pursuit of our investor-protection mission, as our accomplishments in 2024 demonstrate,” said PCAOB Chair Erica Y. Williams. “With the approval of our 2025 budget, the PCAOB is poised to continue delivering results for investors and the U.S. capital markets.”

The 2025 budget reflects the resources expected to be required in 2025 for the PCAOB to carry out its statutorily-mandated responsibilities under the Sarbanes-Oxley Act and to achieve the goals and objectives set forth in its 2022-2026 Strategic Plan. That plan is built around four key goals to help the PCAOB fulfill its investor-protection mission: (1) modernize standards, (2) enhance inspections, (3) strengthen enforcement, and (4) improve organizational effectiveness.

2024 Accomplishments

In support of its strategic goal to modernize standards, the PCAOB in 2024:

• Adopted a new standard designed to lead registered public accounting firms to significantly improve their quality control (QC) systems, replacing QC standards that were developed and issued by the auditing profession before the PCAOB was established in 2002.

• Adopted new requirements to standardize disclosure of firm and engagement metrics that can further PCAOB oversight activities and be used by investors, audit committees, and other stakeholders to drive improvement in audit quality.
• Adopted amendments that will modernize the PCAOB’s annual and special reporting requirements to facilitate the disclosure of more complete, standardized, and timely information by registered public accounting firms.
• Adopted a new auditing standard that enhances and consolidates a group of standards, originally adopted on an interim basis by the PCAOB in April 2003, addressing the general principles and responsibilities of the auditor, such as due professional care and professional skepticism.
• Adopted amendments to certain existing auditing standards to clarify auditor responsibilities when using technology-assisted analysis of information in electronic form.
• Adopted a rule amendment enabling the PCAOB to hold associated persons accountable when they negligently, directly, and substantially contribute to firms’ violations.
• Adopted a rule amendment enabling the PCAOB to address situations in which a registered firm either has ceased to exist, is nonoperational, or has lost interest in maintaining its registration, as demonstrated by its failures to file annual reports and pay annual fees for at least two consecutive reporting years.
• Issued proposals aimed at (1) replacing an outdated auditing standard on substantive analytical procedures and (2) protecting investors from misinformation about PCAOB registration and oversight.
• Provided resources to assist audit firms with the implementation of recently adopted requirements.

In support of its strategic goal to enhance inspections, the PCAOB in 2024:

• Issued the 2023 inspection reports of all annually inspected firms months earlier than in recent years – and most 2023 triennially inspected firms within six months of the inspection completion date – thanks to ongoing efforts to speed the release of inspection information.
• Unveiled new online charts displaying data from the inspection reports of annually inspected firms, making it easier for stakeholders to understand inspection results.
• Published more staff publications than ever before, sharing inspection observations, good practices, and reminders in the areas of auditor independence, bank financial reporting audits, commercial real estate, and root cause analysis, among other topics.
• Provided new resources to support smaller audit firms, including the launch of the Audit Focus publications and video series.

In support of its strategic goal to strengthen enforcement, the PCAOB in 2024:

• Prioritized investigation and enforcement efforts that address serious issues that pose risk to investors, including significant audit violations, failures relating to auditor independence, and matters threatening the Board’s oversight activities (e.g., noncooperation with PCAOB inspections and investigations).
• Broke its calendar-year penalty record by April of 2024, imposing $35 million in penalties so far this year.
• Concluded major enforcement matters involving exam cheating at audit firms and misinforming investigators, including one matter for which the PCAOB imposed a $25 million fine – the largest civil money penalty in the history of the PCAOB.
• Announced numerous settled disciplinary orders in the area of quality control, underscoring the importance of audit firms having effective quality control systems to protect investors.
• Continued to hold individuals who engage in wrongdoing accountable for their actions.
• Continued to conduct enforcement sweeps to protect investors and support PCAOB oversight.

In support of its strategic goal to improve organizational effectiveness, the PCAOB in 2024:

• Enhanced its stakeholder outreach and support for smaller audit firms by organizing a nationwide series of in-person and virtual forums for auditors of smaller businesses and broker-dealers, with each event hosted by a different Board Member.
• Launched new initiatives to make internal PCAOB processes more efficient, while continuing ongoing efforts aimed at retaining current staff and attracting the best and brightest to the PCAOB.

2025 Budget Subject to SEC Approval

With core investments in people, processes, and technology, the budget is $399.7 million and provides funding for 945 positions. The PCAOB budget is subject to approval by the U.S. Securities and Exchange Commission.

The budget documents, along with such documents from previous years, including the 2022-2026 Strategic Plan are available on the PCAOB website.

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About the PCAOB

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers registered with the Securities and Exchange Commission, including compliance reports filed pursuant to federal securities laws.

Contact

PCAOB Office of Communications and Engagement
[email protected]