At a year-end AICPA conference, Securities and Exchange Commission (SEC) Chief Accountant Kurt Hohl outlined an ambitious agenda for accounting and auditing for the coming years, including active oversight of the Public Company Accounting Oversight Board (PCAOB) and the Financial Accounting Standards Board (FASB).
Most notably, the profession can expect changes to the way the PCAOB inspects public company audits and how the board sets standards. If implemented, these changes will represent major shifts in the supervision of auditors.
Such planned efforts come as President Trump’s SEC chair appointee, Paul Atkins, has emphasized the capital formation aspect of the agency’s mission. By contrast, the previous leadership during the Biden administration focused on aggressive rulemaking and enforcement priorities.
Hohl said that his agenda largely stems from changes in the business environment.
PCAOB Audit Inspections
The accounting chief said that the inspection process has largely worked the same way for the last two decades. The Sarbanes-Oxley Act of 2002 established the PCAOB following accounting scandals at companies like Enron and WorldCom, and board inspections have helped to improve audit quality over the years.
“There’s a change in standards that basically maybe requires the PCAOB to change how they focus on inspecting firms,” Hohl said, referring to the quality management standards adopted by the International Auditing and Assurance Standards Board (IAASB) in 2020 which became effective in 2022. In particular, Hohl pointed to IAASB Quality Management Standards (ISQM) 1.
The AICPA’s Auditing Standards Board, which writes auditing standards for private companies, adopted its own quality management standards based on ISQM 1. The AICPA’s goal is to converge with international standards as much as possible.
“So all auditors in the U.S. are essentially following ISQM 1 or some derivation that’s fairly close,” he said.
For public companies in the U.S., the PCAOB last year adopted Quality Control 1000, and firms are preparing to implement the new standard, though the effective date got delayed by one year.
“Maybe there’s an opportunity for the PCAOB to shift the inspection program to focus more on system of quality management. And I think what that will do, in my own personal view, is it will shift the accountability to the leadership of the firm and their systems and processes, and less on individual engagement teams and the partners,” Hohl said at the AICPA Conference on Current SEC and PCAOB Developments in Washington on December 8, 2025.
“There’s a lot of stress in the environment for teams who get inspected,” Hohl explained. “So a shift in focus toward the firm and how they support their engagement teams and the execution of high-quality audits, I think, is probably overdue.”
Moreover, Hohl will look at refreshing the PCAOB’s audit inspection reports.
During his roughly five months as chief accountant, Hohl has reached out to various stakeholders, including audit committee members, to try to better understand how they use inspection reports.
“Is it really a useful mechanism for communicating audit quality outside the firms. And I think there’s a lot of room if you’re going to change the inspection process to focus more on system of quality management that has complications for how the inspection report might read, because there’s a provision in the statute that keeps quality control findings kind of private for a year unless the firms remediate,” Hohl said. “So there’s a lot of opportunity [to add] some contextual information to inspection reports.”
PCAOB Standard-Setting Process
Hohl said that the PCAOB could do something similar to what the accounting standard setter FASB does when it routinely conducts public agenda consultations, asking stakeholders which projects it should work on.
“I think the PCAOB could benefit from that as well,” he said.
In another major shift, Hohl believes that the PCAOB, just as the AICPA is doing, should try to converge with IAASB standards as much as possible, especially as all the major firms use the international auditing standards as the baseline for their audit.
In his view, it will “be beneficial for investors because it will essentially develop a single set of high-quality standards. It will essentially significantly reduce cost and complexity, because if you’re working on a multinational group audit and you’re doing statutory accounts in your local under ISA standards, and you basically are working on as a component for an SEC engagement, you have to basically use a different set of standards, and that adds confusion, costs, and the risk for non-compliance.”
PCAOB Consultation
Just as the SEC’s Office of Chief Accountant (OCA) provides consultation on tricky accounting matters to preparers and auditors before filing financial statements, Hohl said the PCAOB staff can provide consultation on difficult audit issues.
“I think auditors struggle with the same thing: ‘How do I basically apply the auditing standards in a fact pattern that I’m dealing with and try to get answers from the PCAOB staff that they basically can apply before they finish their audit,’ so that they don’t get an inspection finding someplace down the road,” Hohl said.
Auditor Reporting
Auditors provide a lot of disclosures either to the PCAOB or the audit committees. “I would basically like to readjust that to focus on really material items that are relevant to investors,” he said.
Waiting for New Board Members
In the meantime, the first order of business is for the SEC to appoint PCAOB members in the coming weeks. The SEC will replace all or almost all current board members. Board member Christina Ho said she is not seeking her second term. One current member might be kept on for continuity. For example, in prior appointment in late 2021, the SEC replaced all except for Duane DesParte, who briefly served as acting chair and subsequently left when his term ended in October 2023. Thus, it remains to be seen if Acting PCAOB Chair George Botic will go back to being a board member for continuity. Botic succeeded DesParte.
FASB Oversight
Hohl said he regularly talks with FASB Chairman Rich Jones, and he is focused on the timeliness of standard-setting.
The OCA staff has held off on all the crypto issues until Hohl came to the SEC.
“The challenge with that is they don’t fit really neatly into existing accounting standards. So trying to get issues accumulated and talk to the FASB and see whether they can have some mechanism like the reconstituted EITF [emerging issues task force] to take some of these issues up is really important,” he said. “Obviously, our offices can answer these questions, and we have the authority to interpret what the accounting standards are, but I’m very appreciative of the due process, and making sure that we’re careful and thoughtful about how accounting standards are developed and making sure that we work closely with the FASB is a critical element of that.”
Hohl and Jones have started to discuss these crypto issues and will decide whether some of these could be put on the EITF agenda or whether the SEC or FASB should provide guidance in another way.
Cost-Benefit of Standards
The SEC’s top accountant said that he is also “extremely focused on” cost and benefit analysis, which is a major challenge.
“Standard setting is a very difficult task, and you’re trying to basically please the two factions on opposite sides: investors want more information; preparers who are basically focused on compliance costs associated with those new standards,” Hohl said.
Thus, he asked Jones and his team to make sure that the FASB engages in a thoughtful manner to figure out the costs of new disclosure standards because high compliance costs discourage companies from accessing the public market.
Convergence With International Accounting Standards
In terms of accounting convergence, Hohl told Jones that it is important for him to work with the International Accounting Standards Board (IASB) in developing international accounting standards and vice versa for the IASB to work with the FASB to learn from each other.
Hohl is focused on getting as much cooperation and convergence as possible as it will reduce investor confusion.
“There’s new costs associated with it. And I think we can basically leverage the work of each body to get developing standards out faster,” Hohl said. “So if the IASB takes a topic first, and the FASB wants to basically take a similar project afterward, they can basically learn from the feedback that that the IASB has gotten, and they think maybe get out standards on a quicker basis. The big challenge here, too, on the cost side, is trying to figure out how to get preparers and those types of stakeholders participating in the standard setting process.”
Auditors, especially big firms and investors voice their views. But some trade associations for preparers come after the fact and tell the FASB that they don’t like the standard and ask the board to change it or ask if they do not have to follow it.
“And we have to figure out a mechanism for companies to participate on the front side of the project to inform the FASB so that we can get fairly high-quality standards at a reasonable cost,” he said.
Auditor Independence Rule Review
The OCA will also review audit firm independence rules as private equity firms are increasingly investing in accounting firms, and both companies and firms are using artificial intelligence (AI) to save money or make various functions more effective and efficient.
Alternative practice structures provide a capital boost to invest in emerging technologies, but they also present risks, especially in the independence of auditors.
“So we’ll be focused on those emerging issues as they develop and decide and figure out what we need to do,” Hohl said.
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