Statement in Support of the Proposed Auditing Standard – The Auditor’s Use of Confirmation, and Other Proposed Amendments to the PCAOB Standards

Remarks as prepared for delivery

Thank you, Chair Williams. Today I cast my vote to support the proposed auditing standard on “The Auditor’s Use of Confirmation, and Other Proposed Amendments to the PCAOB Standards.

This new proposal applies to all audits conducted under PCAOB standards, is intended to be principles-based, and expands confirmation methods to include electronic confirmations. Confirmations are critical audit procedures to obtain audit evidence from third parties concerning the existence of cash and other significant accounts, as well as to detect fraud.

I am pleased that this proposal addresses some of the technological advancements in auditing. As noted in our 2022-2026 Strategic Plan, PCAOB must continue to anticipate and respond to emerging trends impacting audit quality. To that end, this Board recently launched the Technology Innovation Alliance (TIA) Working Group, on which I am privileged to serve as the Chair 1. One overarching goal of this working group is to consider a wholistic approach to emerging technologies and the associated impact to the PCAOB.

I recently thought of an analogy related to moving into a 20-year-old house. While you could buy new furniture, have the house painted, and even get new flooring and new kitchen cabinets, you might also want to rethink the layout of the house and perhaps even make it “smart” which might require rewiring the whole house. Rethinking the layout and making the house “smart” would take more time and has a more pervasive impact, but we still want our house to be functional and comfortable. So, we must take a multi-prong approach, in a logical sequence. I equate the work on our short-term and medium-term agenda including this proposal to be synonymous to refreshing the old house. The TIA Working Group will develop recommendations for the Board on strategic changes needed for the future.

Thank you to those who worked tirelessly on this proposal, including Barbara Vanich, Dima Andriyenko, Lisa Busedu, David Hardison, Dani Verbeck, Michael Gurbutt, Tian Liang, Tasneem Raihan, and many others who have contributed to this proposal.

As always, I look forward to commenters’ feedback in helping the PCAOB refine this proposed standard with the ultimate interest of protecting investors.