Thank you, Chair Williams for your leadership. I am delighted to support the establishment of the Standards and Emerging Issues Advisory Group and the Investor Advisory Group. I also support the dissolution of the prior advisory group.
The Sarbanes-Oxley Act of 2002 requires us to convene, as appropriate, expert advisory groups to make recommendations concerning the content of standards. Advisory groups are also an important mechanism for us to hear from our stakeholders. The establishment of these two advisory groups will inform our ambitious and long overdue updating of our standards. I look forward to receiving their recommendations in the months and years ahead.
I am particularly pleased that emerging issues will be an area of focus. The evolving role of technology in auditing and how it will impact future auditing standards warrants special consideration. With increased digitization, adoption of advanced technology such as robotic process automation and artificial intelligence (AI), elevation of cybersecurity risks, and other market transformation, providing assurance on financial disclosures prepared by issuers is becoming increasingly complex and crucial to investors. The traditional audit approach based on existing auditing standards and best practices may not be sufficient in promoting public trust of financial information in the not-too-distant future. As regulator, we have the duty to be forward-thinking when evaluating the impact of technology and data on the future of auditing, and proactively address them in our standard-setting, inspection, and enforcement activities. Technology is likely to fundamentally change the nature, timing, and extent of the audit someday. For example, auditors will use advanced technology to collect and analyze a massive amount of structured and unstructured data on a more continuous and real time basis. These fundamental shifts could have significant implications on auditing standards and compliance. That is why I am thankful for the advisory groups in advising us on these important and strategic issues.
In addition, the development and use of emerging technologies in the audit process can have a positive impact on the preparation of informative, accurate, and independent audit reports. For example, robotic process automation software has the potential to streamline the collection of audit evidence by replacing the simple, repetitive, and time-consuming tasks that auditors perform. Such software could make the audit process more efficient. But any efficiencies gained through such technology will only improve audit quality and enhance investor protection if, among other things, the freed-up auditor time is spent scrutinizing complex, high-risk areas – areas that require professional judgment and skepticism.
I want to thank the PCAOB staff for their consummate professionalism and dedication in the development of the two charters that are the subject of today’s recommendations. They are the beating heart of this organization, and I am proud to serve with them.