Chairman Logothetis Statement on PCAOB Strategic Priorities

Remarks as prepared for delivery 

Good morning. It is an honor and a privilege to commence my first open Board meeting as Chairman of the PCAOB.

I want to take a moment to express my gratitude to my fellow Board Members for your insights, experience, and collaboration as we begin charting the next chapter of the PCAOB together.

I also want to acknowledge the dedicated staff of the PCAOB. In my first few weeks as your Chairman, it has become clear to me that the strength of the organization lies in your work. For that, I am grateful and looking forward to continuing to advance the PCAOB’s important investor-protection mission together.

Request for Public Comment on the PCAOB’s Strategic Priorities

I am pleased that the first open Board meeting of my chairmanship is to solicit the input of our stakeholders on what the PCAOB’s strategic priorities should be, even before we begin the critical work of developing a new five-year strategic plan for the organization.

This is the first time the Board has considered a release seeking public comment from stakeholders this early in the strategic planning process, and I am proud that we are making this early moment of transparency our starting point. We will use the stakeholder input to inform our work on the strategic plan which we will separately expose for public comment later this year.

I believe the PCAOB functions best when it is informed by the perspectives of participants from the full financial reporting ecosystem. Investors, audit committee members, preparers, auditors, and academics, to name a few, all bring unique insights that can strengthen our mission and day-to-day work to enhance audit quality.

While this request for comment includes specific questions the Board is interested in exploring, I want to encourage commenters to not feel bound by those questions. We welcome broader perspectives on the opportunities and challenges facing the PCAOB, including how its work impacts the audit profession and U.S. capital markets. And we welcome perspectives from those who might not have previously engaged with us. I want to hear feedback from the full range of participants who make our capital markets function.

Today’s open Board meeting is an important first step in what I know will be a productive, innovative, and forward-looking period for the PCAOB. I want to thank everyone in advance who shares their views and contributes to this collaborative effort.

Before I turn to my fellow Board Members for any remarks they might have and then to the PCAOB staff for their presentation and recommendation, I would like to share what motivated me to take on this role along with a few thoughts about some important near-term priorities for the PCAOB.

A Personal Reflection

I grew up in a small village in Greece without electricity or running water. I attended a one-room schoolhouse until sixth grade. My family, like most of our village, received assistance from the United States and depended on those resources in order to make ends meet.

While my family didn’t have much in terms of material wealth, we had an abundance of something far more important: values. My parents taught me that integrity is not situational, hard work is not optional, and that trust, once earned, must never be taken for granted.

Those early lessons shaped my life. They guided me as a young boy arriving in the United States with limited resources but unlimited determination, and they carried me through my career in the audit profession, where I saw firsthand how essential trust is to the functioning of our capital markets.

After a long and fulfilling career, I was enjoying retirement, spending time with my family, traveling, and even trying to learn how to play golf, with slightly mixed results. I did not expect to return to a full-time role, but when the potential to serve the public as Chairman of the PCAOB arose, I was reminded of the opportunities this country gave me and my responsibility to give back in return.

As I advanced through the Board selection process, I found myself deeply moved and inspired by SEC Chairman Paul Atkins’ address before the New York Stock Exchange last year.

Reflecting upon America’s upcoming 250^th anniversary, he called for people to step up, and by doing so, “[E]nsure that the American story…is preserved not by memory or speeches alone, but by the courage of those who are determined to chart its next chapter.”

This call to action served as further motivation for me to join the Board.

All of these experiences bring me here today. I believe that the values that shaped me are the same values that shape our work at the PCAOB: integrity, trust, accountability, and a deep respect for those we serve and for the resources provided to us.

My First Weeks as Chairman

As I stepped into the role of Chairman, I reflected on the origins of the PCAOB and the mandate that Congress entrusted to us, and I looked ahead to what is required to ensure that the PCAOB remains a strong and effective regulator for the next 25 years and beyond.

My immediate focus areas were threefold:

First, to ensure a smooth transition for the organization. For that, I want to thank my colleague and now friend, Board Member George Botic, for his leadership and partnership during this period.

Second, to secure a world-class group of public service-minded leaders to join my office so that we can hit the ground running. I am pleased to have my Chief of Staff, Brent Simer, and Special Counsel, Danette Edwards, already working alongside me, and I anticipate filling out the rest of my office in the coming weeks.

Third, to hear from the PCAOB’s stakeholders and our expert staff about what the PCAOB should be focused on. I appreciate the thoughtful and candid input I have received so far and look forward to continuing to hear feedback.   

Through these conversations, I believe the PCAOB recognizes the appropriately high expectations placed upon us by investors, audit committee members, and the broader public. And I believe that with the right roadmap emphasizing innovation, efficiency, and effectiveness, the PCAOB will remain a critical safeguard for the integrity of the U.S. capital markets.

As we look ahead, I believe we must get back to the basics – back to the fundamentals of audit quality, investor protection, and disciplined, responsible oversight.

Throughout my extensive career—serving as an auditor, audit committee member, and now as PCAOB Chairman—I have seen first-hand how the audit environment has evolved. In my initial weeks as Chairman, I have reflected on whether the PCAOB has adapted sufficiently to these changes. Audits have evolved significantly since the PCAOB was established. Although our inspections program has played a significant role in enhancing audit quality over time, it is important to evaluate to what extent the program remains fit for purpose and whether our capital markets would benefit from a modernized approach.

Moreover, as technology continues to reshape how audits are conducted, it is imperative for the PCAOB to enhance its own technological capabilities. However, advancement in technology alone is not sufficient; we must also invest in the training and development our people need to use technology responsibly. And we must deepen our engagement with stakeholders across the financial reporting ecosystem, ensuring that the PCAOB experts who promulgate audit standards are more accessible to front-line auditors.   

The integrity of our capital markets depends on an audit regulator that evolves alongside the profession, embraces technology responsibly, invests in its people, and maintains open dialogue with all market participants. It is a new day for the PCAOB, but it is not a new mission. What must evolve is how we carry out that mission in a rapidly changing environment.

Near-Term Priorities

While the PCAOB awaits input from stakeholders on what our strategic objectives should entail – and as we begin the work of developing a new strategic plan to guide the PCAOB’s medium-and-longer term efforts – it is clear to me, based on the time I have already spent here, that there are several near-term priorities we should begin advancing immediately.

I believe a framework recently articulated by Chairman Atkins – Advance, Clarify, and Transform, or “A-C-T” – serves as a thoughtful approach for the direction the PCAOB must take as well.

Advance

As part of our strategic planning process, we will also refresh our standard-setting initiatives. To support this effort, we are seeking the input of stakeholders on potential changes to the current slate of initiatives through a question in the request for comment on the strategic priorities. It is important that our agenda evolves with the audit and financial reporting ecosystem, and this solicitation process will help ensure that our efforts reflect the realities of today’s investors and the U.S. capital markets.

We will use the input from stakeholders in response to the request for comment to refresh our standard setting plan. We will then solicit, for the first time in the PCAOB’s history, public comment on our refreshed standard-setting focus areas before they are finalized through an agenda consultation.

While I look forward to input from stakeholders on what projects should be prioritized by our Office of the Chief Auditor (OCA), I have also directed staff to develop for the Board’s consideration a supplemental request for comment to seek public input on certain provisions of QC 1000.

Since the Board issued a concept release in 2020, one goal of this project was to establish a robust standard that requires firms to design quality management systems tailored to the specific risks of their practices. At the same time, the PCAOB also sought to minimize differences with the International Standard on Quality Management, or ISQM1, to promote one globally consistent standard for designing and maintaining an effective quality control system.

That remains an important objective. We continue to want a standard that is rigorous, principles-based, and harmonized, to the extent appropriate, with ISQM1.

As some stakeholders have observed and articulated in comment letters throughout the standard setting process, certain requirements included in QC 1000 may be unnecessary for the standard to meet the regulatory objectives of the PCAOB and may not contribute to audit quality.

Investor protection and audit quality will forever remain the PCAOB’s North Star, and they will continue to guide us even as we consider whether narrow revisions to the standard and related amendments are warranted to ensure that implementation is both effective and practicable.

We will also assess our inspections process to determine how to best tailor it so that PCAOB inspections generate more meaningful outputs for consumers of inspections reports. As inspections are one of the principal tools for the PCAOB to implement its oversight mandate, we must pivot to better leverage automation and artificial intelligence (AI) and focus them on the bedrock of audit quality—firms’ systems of quality management—with engagement-level reviews serving as validation of those systems, as opposed to being the core emphasis.

I expect that making this shift will have multiple benefits. Among them, the resulting inspection reports should be clearer and provide more meaningful information and therefore should be more user-friendly for stakeholders. The timing of these innovations, moreover, will dovetail nicely with QC 1000—it will allow firms to implement the new QC standard in parallel with adapting to a new inspection focus.

We will also advance our internal culture at the PCAOB to be one that is both disciplined and cost-effective. We are committed to fostering a culture that delivers strong oversight while being responsible stewards of our resources. I believe effective regulation by the PCAOB must adhere to our Congressionally mandated mission to protect investors without imposing burdens on our capital markets beyond what the public interest requires.

Clarify

As I noted previously, the “C” in the A-C-T framework stands for “Clarify.” To meet that objective, the PCAOB is designing a formal consultation process within OCA to provide timely guidance on complex or novel auditing issues. This will help ensure that the interpretation of standards rests with the standard-setting functions—not with inspections or enforcement. Additionally, the PCAOB’s newly launched Audit Practitioner Fellowship Program will bring professionals with recent, real-world experience into the PCAOB. Their insights will help strengthen our ability to anticipate what lies ahead and enhance our understanding of the most pressing issues affecting auditing.

The PCAOB will also continue strengthening our engagement with investors, audit committees, preparers, and audit firms—domestically and internationally. High-quality auditing is a global endeavor, and our oversight must reflect that reality.

Internally, the PCAOB will reinforce clear expectations, transparent communication, and a culture where performance is recognized and excellence is rewarded.

Transform

We now turn to the “T” in the A-C-T strategy, which represents “Transform.” The PCAOB must leverage technology, including AI, to enhance our operations and the way we perform our statutory responsibilities. Technology is reshaping the audit profession, and it must reshape audit oversight as well. The PCAOB must be forward-leaning, technologically adept, and prepared for the next generation of audit risks.

That level of incredible transformation will also require an investment in those who make it happen: our people. The PCAOB’s staff are our most important asset—they are the elite corps of the audit profession—and we will continue to invest in their professional development, so they have the tools and skills needed to meet the demands of a rapidly evolving capital market.

Finally, the PCAOB must operate on more than our front foot. We must anticipate risks rather than react to them. This is essential to fulfilling our mission in a dynamic and increasingly complex environment.

Closing

When he signed the Sarbanes-Oxley Act into law, President George W. Bush noted that “the American economy depends on fairness and honesty.”

That principle remains as true today as it was then, and it calls us back to the basics that I mentioned earlier—to the foundational responsibilities that have guided the PCAOB since its creation. Our obligation is to uphold those values through independent oversight and a steadfast commitment to strengthening audit quality and protecting investors.

Everyone who is part of the ecosystem striving to improve audit quality has a significant role to play in achieving our core mission as we evolve to the current and future needs of our capital markets, for the benefit of investors, society, and our world.

I look forward to what we will accomplish together as we continue to advance the PCAOB’s mission.

Thank you.