PCAOB Sets 2025 Inspection Priorities: Raising the Bar on Audit Quality

The Public Company Accounting Oversight Board (PCAOB) has unveiled its inspection playbook for 2025, and it’s clear: the watchdog is doubling down on tackling risks and driving improvements where it counts most. The new staff report, released today, is packed with insights for auditors, audit committees, and anyone invested in safeguarding the financial system’s integrity.

“Inspecting audit firms is one of the most important tools the PCAOB uses to protect investors,” said PCAOB Chair Erica Y. Williams. “We encourage audit firms and audit committees to read this report, which provides timely perspectives to drive improvements in audit quality.”

The PCAOB isn’t just casting a wide net. It’s laser-focused on industries and companies where audit issues are more likely to crop up. In 2025, inspectors will prioritize audits in sectors grappling with specialized accounting challenges or economic uncertainty—think financial services, real estate, and IT.

Also on their radar are businesses facing supply chain woes, engaging in mergers or acquisitions, or showing signs of “going concern” risks. And broker-dealers? They’re not off the hook either, especially those filing compliance reports or offering investment options to customers.

The Big Risks Auditors Need to Watch

If you’re in the audit world, the PCAOB’s list of inspection priorities reads like a to-do list of what not to mess up. Expect a closer look at:

• Problem Areas of the Past: Audit areas that have historically been trouble spots.
• Technology’s Growing Role: How firms are using tools like generative AI to crunch numbers (and whether they’re doing it right).
• Crypto’s Audit Challenges: Digital assets are still a big question mark for many auditors, and the PCAOB wants answers.
• Critical Audit Matters: Those high-stakes disclosures that can make or break an investor’s trust.
• Firm Culture and Quality Control: From independence policies to client acceptance procedures, how firms operate matters.

A Conversation Starter for Audit Committees

Audit committees aren’t just bystanders in this process—they’re a vital part of the equation. To help them dig deeper, the PCAOB report includes a fresh set of questions committees can use to hold auditors accountable. From internal controls to the role of technology in audits, these prompts aim to spark meaningful discussions and ensure everyone’s on the same page.

As we head into 2025, the stakes couldn’t be higher. Economic uncertainty, rapid technological advancements, and evolving risks are rewriting the rulebook for audit quality. By outlining these priorities, the PCAOB is doing more than inspecting firms—it’s setting a benchmark for the entire profession.

The full report is available on the PCAOB’s Staff Publications page, along with other resources to help auditors and stakeholders navigate the year ahead.

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