Chair Williams Remarks at PCAOB Forum for Auditors of Small Businesses and Broker-Dealers in Chicago

Remarks as prepared for delivery

Kent, thank you for the introduction, and for the work you and your team in our Office of Communications and Engagement do to organize, promote, and execute these forums. I want to give a particular shout-out to Brian Goodnough for everything you do to ensure these events are such a success.

I also want to recognize the expert staff from our Office of the Chief Auditor and our Divisions of Registration and Inspections and Enforcement and Investigations, who you will hear from later today.

I am continuously impressed by the work ethic, experience, know-how, and dedication of our incredible staff. Nothing we do is possible without them. They are a tremendous resource for you, and I hope you will take full advantage of the expertise they can offer.

Finally, I want to thank the staff from both the SEC and FINRA who will be participating in today’s forum.

Before I begin, I must first provide the standard disclaimer that the views I express today are my own and not necessarily the views of the other PCAOB Board Members or the PCAOB staff.

The PCAOB has always appreciated the important role of auditors of small businesses and broker-dealers. Auditors of small businesses and broker-dealers have a crucial position in the financial reporting ecosystem, applying their expertise, professional judgement, and skepticism to drive audit quality.

Today, there are more than 500 triennially inspected PCAOB-registered audit firms that either audit or play a substantial role in the audits of over 3,200 public company issuers. As it relates to the audits of broker-dealers, more than 280 registered firms audit approximately 3,300 SEC-registered broker-dealers.

Simply put, your work as auditors of small businesses and broker dealers is vital to ensuring that the U.S. capital markets remain the envy of the world.

That is why these forums have been a priority to the PCAOB since the very first one in 2004. This is an opportunity for us to hear directly from you and learn more about your work and the challenges you may face—and for you all to hear directly from our expert staff.

Before we move into those discussions, I want to spend a few minutes on the work our staff is doing to advance our investor-protector mission and how the PCAOB stays mindful of the challenges affecting smaller firms and broker dealers, beginning with our standards.

How the PCAOB Is Achieving Our Investor-Protector Mission

As part of our standard setting and rulemaking process, the PCAOB puts incredible emphasis on incorporating feedback from a wide variety of stakeholders, including smaller firms.

We know that smaller firms have unique challenges and needs, so we want to ensure our standards and rules are scalable for firms of all sizes.

That approach is incorporated into the new quality control standard, QC 1000.

A firm’s QC system influences virtually all firm activities. When QC systems operate ineffectively, investors are put at risk. But when QC systems operate effectively, quality audits are likely to follow. 

We know that risks vary from firm to firm, so a one-size-fits-all approach is not the best way to keep investors protected. The new standard requires all registered firms to identify their specific risks and design a QC system that includes policies and procedures to guard against those risks.

Similarly, we also took special care in our AS 1000 or General Responsibilities of the Auditor project, which included amendments to our audit documentation standard that require firms to assemble a complete and final set of audit documentation for retention within 14 days after the report release date.

While many larger firms are already operating within this window, we know that smaller firms may need more time to make the change. So, we took a phased-in approach to implementation. For firms that issued audit reports with respect to more than 100 issuers, the new 14-day document completion requirement became effective for audits of financial statements for fiscal years beginning on or after December 15, 2024. For all other registered public accounting firms, like many of you here today, the new requirement is effective for audits of financial statements for fiscal years beginning on or after December 15, 2025.

Once a new standard, rule, or related amendments becomes effective, we don’t stop considering the views of smaller firms. Through surveys and other means of communication, we continue gathering information about the impact on firms of all sizes. We want to know how implementation is going and whether any challenges are developing.

As many of you are preparing for these upcoming changes, the PCAOB is ready to help.

Our expert staff have been hard at work, publishing many different types of materials from guidance documents to recordings featuring expertise from our staff on the upcoming changes to QC 1000, AS 1000, and other newly adopted standard-setting and rulemaking projects.

If you haven’t already, please check out our website, where you can find these resources, as well as many other tools and information, including two ways you can contact us should you have questions – either directly by phone or through filling out an online form.

We are also planning two upcoming in-person and virtual workshops, which our staff will host to support smaller firms’ QC 1000 implementation efforts. One workshop will be conducted in Washington, DC on May 13 and another one is planned to occur in Dallas, Texas in early summer. Stay tuned for more information on those opportunities, which will be released in the coming weeks.

In addition to implementing these new standards, we’re also continuing to enhance our inspection program—one of the most important tools we have to keep investors protected.

Earlier this week we released a summary of our inspection results for 2024, where we saw significant improvements in aggregate deficiency rates across inspected firms, including smaller firms who audit 100 or fewer issuers each year.

Although the same smaller firms are not inspected year-to-year, taken together with the improvements we see across firms, it is clear we are seeing real progress that leaves investors better protected.

Still, our work is far from over, and I urge the profession to continue to build on this momentum.

Just as with standard implementation, the PCAOB is here to help.

In addition to detailing the inspection findings, the Spotlight released earlier this week also includes good practices to help firms continue to improve.

I also want to take a moment to give our staff a shoutout for publishing this Spotlight months sooner than in previous years. This requires an extraordinary amount of work on their part, and they go that extra mile because we know the sooner we can get this information to you the more useful it is.

Similarly, our annual broker-dealer report will provide good practices and resources to help you improve your audit execution when it is released later this year. In the meantime, you can find last year’s report on our website.

And, these are just two examples of the many materials we release to provide you with resources and information. In November, we launched Audit Focus, a series of PCAOB staff publications tailored specifically for small firms. It aims to provide succinct, easy-to-digest information to help you.

The questions and comments you share at these forums, and your interactions with our staff throughout the year, help us determine which topics to focus on next.

If you are not receiving Audit Focus reports and other documents, I encourage you to go on our website and sign up.

We recently added a dedicated page on our website just for auditors at smaller firms. It’s a one-stop-shop for resources, tools, and information specifically designed with smaller firms in mind. You can also sign up for our latest emails for smaller firm practitioners. If you haven’t checked it out yet, I encourage you to do so—and let us know what you think. We want your feedback.

Of course, we are continually monitoring developments with smaller firms through our inspections. This not only informs our rulemaking and standard-setting activities, but assists us in identifying issues and challenges facing smaller firms where guidance might be helpful.

And I want to encourage you to please talk to us during inspection cycles and beyond. Please reach out to our inspection staff with questions or provide insights. We want to hear from you and learn more about your work and unique challenges.

Finally, we continue to expand our outreach—and it’s why we’re here today before you all. These forums give us an opportunity to share valuable resources and information with small firms like you, while also giving us a chance to hear directly from you.

Closing

I want to emphasize that the work you do as auditors of small businesses and broker-dealers is indispensable to the strength and integrity of our financial markets. And I encourage you to take advantage of the resources and tools we've developed, stay connected with us, and keep sharing your perspectives—they are invaluable to shaping the future of audit quality.

Again, thank you for being with us today. I look forward to your questions.