The Public Company Accounting Oversight Board is forming a new advisory panel as the regulator looks to modernize how it inspects the work of public company audit firms.
The PCAOB said May 28 that it’s seeking outside parties with a stake in the board’s inspection activities to participate in the work of the new Inspections Modernization Council.
According to the Financial Times, the PCAOB is mulling a new inspections strategy, which would focus less on inspecting particular audits and more on grading accounting firms’ overall systems of quality control.
Speaking at the Forum on Auditing in the Small Business Environment and on Auditing Broker-Dealers earlier this month, PCAOB Chairman Demetrios Logothetis said the PCAOB is taking steps to ensure its inspection program is fit for the next 25 years.
“Let me be clear: I believe our inspections program has contributed to meaningful improvements in audit quality since the PCAOB was created more than two decades ago. However, I also believe it is time to modernize the program by grounding it in QC 1000 [the PCAOB’s new quality control standard] and leveraging emerging technologies like artificial intelligence,” he said. “To help us navigate the complexities of redesigning our inspections program, the PCAOB will soon seek experts from across the financial reporting ecosystem to form an inspections task force. We are looking for experts who have a desire to protect investors and have deep knowledge of QC 1000, inspection regimes, and emerging technologies. I encourage everyone who is interested to apply.
“Staying with our inspection program for another moment, as we better leverage automation and artificial intelligence in the inspection process, we also plan to place greater emphasis on firms’ systems of quality management—with engagement-level reviews serving as validation, rather than the core emphasis,” Logothetis continued. “For smaller firms, this shift could lead to clearer, more meaningful inspection reports and a more streamlined process.”
For the IMC, the PCAOB is seeking participants with capital markets expertise and knowledge of the board’s inspection program, including:
- Investors;
- Audit committee members;
- Financial executives at public companies;
- Academics;
- Technologists;
- Other regulators; and
- Practitioners from public accounting firms of varying sizes.
Applicants should have a demonstrated commitment to the interests of investors and the public, the PCAOB says.
The panel is authorized to exist for a period of 18 months from the date of approval of the prospective IMC members, unless the board dissolves it sooner. The PCAOB says it could decide to extend the duration of the IMC.
The IMC’s work is expected to be concentrated in the period between the selection of its members and Sept. 30, 2026. This work is expected to include in-person meetings in Washington, D.C., in July and August, and members are expected to review pre-read materials in advance and come prepared to discuss them at those meetings. For the remainder of its term, the IMC is expected to provide ad hoc advice, including on the implementation of any recommendations, the PCAOB says.
The IMC will include up to 12 members. While the members may be employed or affiliated with other organizations, they will serve in their personal capacities and not as representatives of their employers. IMC members won’t receive compensation.
“Modernization of PCAOB inspections has the potential to bring improved audit quality and other significant benefits to investors and other stakeholders,” Logothetis said in a statement on May 28. “The Inspections Modernization Council will help us shape the future of PCAOB inspections, and we invite individuals of the highest integrity to join us in this effort.”
Application and other information can be found on the Inspections Modernization Council page. The application period will close on June 15, 2026.
Photo credit: Public Company Accounting Oversight Board
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