This statement describes remarks made by Kurt Hohl, Chief Accountant, during a fireside chat with Julie Bell Lindsey, CEO of the Center for Audit Quality, at the 2025 AICPA Conference on Current SEC and PCAOB Developments held on December 8, 2025, in Washington, D.C. [1]
Introduction
The federal securities laws establish the authority of the Securities and Exchange Commission (“SEC” or “Commission”) to set accounting, auditing, and auditor independence standards to be followed in the preparation and the audit of the financial statements of public companies. The SEC’s Office of the Chief Accountant (“OCA”) is led by the Chief Accountant, who serves as the principal advisor to the Commission on accounting and auditing matters pertaining to application of the federal securities laws. “We” and “our” are used in this Statement to refer to OCA or OCA staff.
The staff in OCA are dedicated to improving the financial reporting ecosystem to ensure that such reporting is decision-useful and transparent for the benefit of investors and our capital markets.
OCA’s Priorities
Recently, OCA has had the opportunity to engage with a wide range of stakeholders and reflect on how we can best support the Commission in its mission to protect investors, maintain fair, orderly and efficient markets, and facilitate capital formation. We have identified five key priorities that are grounded in decades of experience with the capital markets, the evolving landscape of financial reporting, and candid feedback from stakeholders:
- Responsiveness to emerging issues;
- Oversight of the Financial Accounting Standards Board (FASB) in its standard-setting activities;
- Oversight of the Public Company Accounting Oversight Board (PCAOB) in its regulatory activities and standard-setting priorities;
- Monitoring international standard setting and governance structures; and
- Strengthening OCA’s capabilities.
1. Responsiveness to emerging issues
We continue to operate in a dynamic environment shaped by innovation, evolving business models, and global interconnectivity. From artificial intelligence (“AI”) to crypto assets, emerging technologies are transforming how companies operate and how financial information is prepared and used.
OCA is committed to ensuring that accounting and auditing frameworks keep pace with these developments. We are focused on understanding the implications of innovation across the financial reporting ecosystem, including the impacts to investors, preparers, audit committees, audit firms, standard setters, and other stakeholders, to better identify where existing standards may need to evolve.
Impartiality and objectivity are cornerstones of public accounting, especially in the context of auditing. The profession must fulfil its auditing duties without being unduly influenced by relationships or external pressures. Auditor independence is under increasing pressure in the age of AI due to both technological and ethical complexities. As AI becomes more embedded in financial reporting and audit processes, we are beginning to explore whether updates to the independence framework are necessary to reflect today’s business environment. Our goal is to support innovation that benefits public markets while preserving the trust and integrity upon which financial reporting depends.
We are also closely monitoring structural changes in audit firms, including those driven by private equity and venture capital investments. While these developments present opportunities, such as access to capital or risk mitigation, they also introduce risks, particularly with respect to audit quality and independence. Our office remains available for consultation on the application of auditor independence rules to these types of transactions and any resulting relationships created or modified because of such transactions.
2. Oversight of the FASB’s activities
High-quality accounting standards are foundational to transparent, decision-useful financial reporting. Our oversight of the FASB is grounded in supporting a standard-setting process that is responsive, based on sound principles, and focused on the needs of investors and other users of the financial statements.
Given the pace of change in how companies do business and access capital, it is increasingly important that accounting standards are developed and updated in a timely manner. We are encouraged by the responsiveness of the FASB, including its agenda decisions related to crypto assets and its use of the reconstituted Emerging Issues Task Force (EITF). Maintaining this momentum will be critical to ensuring accounting standards remain relevant and faithfully represent the underlying economic reality of transactions in an evolving global market.
We continue to work closely with the FASB to share insights from accounting consultations and industry engagement, and we support efforts to enhance the transparency, timeliness and overall effectiveness of the standard-setting process. In that regard, we encourage the FASB to continue strengthening its cost-benefit analyses, ensuring that new and amended standards appropriately balance investor benefits with implementation costs and operational considerations for preparers and auditors. Robust cost-benefit analysis is an essential component of high-quality standard setting and facilitates broader stakeholder acceptance and confidence in final standards.
Early and sustained stakeholder engagement remains a key component of a robust standard-setting process and critical driver of high-quality standards. Input from all stakeholders, including investors, preparers and audit firms, throughout the standard setting process, well before the standards are finalized, helps promote practical, high-quality outcomes and leads to smoother implementation.
Lastly, we strongly support continued and deepened engagement between the FASB and the International Accounting Standards Board (IASB). Ongoing collaboration helps to promote global consistency, reduces unnecessary complexity, and enhances the usefulness of financial reporting across jurisdictions. Where appropriate, we support efforts to minimize differences between U.S. GAAP and International Financial Reporting Standards (IFRS) as issued by the IASB, particularly when doing so improves clarity and comparability for investors.
3. Oversight of the PCAOB’s activities
The PCAOB plays a vital role in the capital markets ecosystem by promoting audit quality and supporting investor confidence. The Commission has the authority to appoint PCAOB Board members, approve the PCAOB’s budget, and provide strategic oversight, among other things. OCA advises the Commission on such matters.
Audit firms have made significant efforts to improve audit quality in recent years. However, the PCAOB and audit firms are also affected by innovation and the changing business environment that comes with it. As the new PCAOB Board gets up and running, OCA will encourage the Board to evaluate how the changing business environment necessitates changes in the PCAOB’s standard-setting agenda and oversight processes.
For example, we will encourage the PCAOB to take a fresh look at its inspections process, particularly in light of new quality control standards, and to consider whether inspection reports are providing meaningful information to stakeholders. The PCAOB could consider whether shifting its inspection process towards the review of a firm’s system of quality management, corroborated by engagement-level reviews, provides more relevant information about audit quality. Doing so may shift accountability upstream to audit firm leadership, where many of the drivers of audit quality originate. Such a model could serve as a blueprint globally and allow for a more consistent metric to evaluate firm performance.
We also support a more transparent and responsive audit standard-setting process. We believe the PCAOB should consider additional transparency in its standard-setting process, for example, adopting an agenda consultation process, similar to the process utilized by the FASB, to transparently solicit public comment on projects for which both an identifiable problem and feasible solutions exist.
From an international perspective, OCA also supports further alignment of the auditing and assurance standard-setting activities between the PCAOB and International Auditing and Assurance Standards Board (IAASB). For instance, the PCAOB could look to the international audit standard-setter when considering their agenda and updating their rules and standards. Alignment of auditing standards, to the extent possible, would greatly reduce risk because it would promote more consistency among auditors across the globe. Some differences are inevitable, but this approach would narrow the unnecessary gaps between PCAOB auditing standards and those set by the IAASB, ultimately bolstering investor confidence and enhancing audit quality.
Lastly, we believe the PCAOB can do more to be responsive to the needs of registered firms. Similar to OCA’s consultation process, the PCAOB could consider establishing a structured consultation process to address questions related to audit standard interpretation. Such a process could further enhance audit quality, serve to avoid unnecessary inspection findings, and foster a more collaborative regulatory environment.
4. Monitor international standard setting and governance
The use of international accounting and auditing standards is widespread in U.S. capital markets. For instance, IFRS are used in every major capital market including the U.S. The market capitalization of foreign private issuers (FPIs) with securities listed in U.S. markets is estimated at over $14 trillion and those using IFRS represents approximately 75 percent of that market capitalization figure.[2] The SEC has allowed the use of IFRS without reconciliation to U.S. GAAP since 2007. Furthermore, the IAASB develops the International Standards on Auditing (ISAs) that, as we understand it, serve as the baseline standards for audit firms operating in U.S. capital markets. Investor confidence in global capital markets depends on the high-quality accounting and auditing standards issued by these entities.
Our office has observed that the international standard-setting system for accounting and auditing are both experiencing significant challenges. We are closely monitoring the governance and funding of international standard-setting bodies, including the IASB and the IAASB.
In a recent speech to the OECD,[3] Chairman Atkins emphasized the importance of high-quality accounting standards. The IFRS Foundation, which oversees the IASB and, more recently, the International Sustainability Standards Board (ISSB), has recently experienced funding challenges. We reiterate the Chairman’s views that the expansion of the IFRS Foundation’s remit cannot divert its focus from its long-standing core responsibility of funding the IASB. Separately, the IAASB operates under the oversight of the International Foundation for Ethics and Audit (IFEA) and the Public Interest Oversight Board (PIOB). These organizations are also facing serious funding challenges given reliance on the profession for funding, creating risks and placing a strain on the system.
It is vital that these organizations remain focused on their core missions and are supported by stable, independent funding structures, particularly given the continued importance of cross-border cooperation amongst domestic and international standard setters.
5. Strengthening OCA’s capabilities
Finally, our office is focused on strengthening its overall capabilities to effectively support the Commission’s mission. This includes continued investment in our people, processes, and tools to ensure we have the right expertise, capacity, and infrastructure to meet evolving demands.
Over the past year, OCA has made meaningful progress in rebuilding and revitalizing our staff. While staffing has declined significantly, we have taken important steps to restore capacity and leadership through the appointment of two Deputy Chief Accountants: Sheri York as the Deputy Chief Accountant for the Accounting Group and Michal Dusza as the Deputy Chief Accountant for the Professional Practice Group. We have also revitalized the Professional Accounting Fellow (PAF) program and selected nine highly qualified professionals to join the office in the coming months.
Beyond hiring, we are focused on ensuring our team has the right mix of skills and experience to address increasingly complex accounting, auditing and financial reporting issues. This includes prioritizing active engagement with stakeholders and ensuring our outreach is reflected in our work. We are also exploring opportunities to leverage emerging technologies, like AI, to modernize our internal processes and drive improvements in efficiency, consistency and effectiveness across our office.
Closing
The Office of the Chief Accountant remains committed to thoughtful oversight, proactive engagement, and continuous improvement. We are here to protect investors, support the profession, and ensure that our financial reporting system remains strong and resilient.
We welcome continued dialogue with all stakeholders—preparers, auditors, investors, and regulators—and we appreciate your partnership in advancing the quality and integrity of financial reporting.
[1] This statement represents the views of the author in his official capacity as the Commission’s Chief Accountant and does not necessarily reflect those of the Commission, the Commissioners, or members of the staff. It is not a rule, regulation, or statement of the SEC. The Commission has neither approved nor disapproved its content. This statement, like all staff statements, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.
[2] Based on a staff analysis that aggregated the market capitalization of FPIs listed on either the Nasdaq or New York Stock Exchange as of December 2025 and that identified, as a percentage of total market capitalization, those FPIs applying IFRS.
