PCAOB inspection priorities for 2025

Is the shiny new year going to bring you a PCAOB inspection? Audit firms and committees that want to know their odds can take a look at the regulator’s newly released list of priorities for 2025.

The PCAOB will continue to prioritize inspections of audits in industries that require “specialized accounting” or that are subject to economic and geopolitical volatility, that have had more deficiencies in the past, or those where companies are “more likely to have a going concern risk,” it said in a report.

But beyond that, it’s planning to “prioritize” inspections of audits of financial institutions, real estate companies, and tech companies. It’ll also continue to target audits of broker-dealers and companies that have done M&A, and consider examining audits of companies that have recently changed their supply chains or logistics.

Areas of emphasis: The PCAOB also stated that it would emphasize the following areas during inspections:

• Compliance with new auditing standards, such as AS 1206, Dividing Responsibility for the Audit with Another Accounting Firm, and the amendments to AS 1201, Supervision of the Audit Engagement, and AS 2101, Audit Planning;
• Critical audit matters (CAMs), the reporting of which has decreased recently (the PCAOB will particularly focus on audits reporting one or no CAMs);
• Technology, including “known cybersecurity incidents” and companies’ and broker-dealers’ compliance with SEC disclosure rules. Additionally, the board warned that AI in financial reporting “could amplify certain existing information technology risks, or potentially create new risks that previously did not exist.” The PCAOB will “continue to be alert broadly” for companies with “significant investment in AI.”
• Crypto assets, especially organizations that have “material crypto asset holdings” and “significant” crypto transactions, and those that have adopted the new FASB standard around accounting for crypto;
• Audit execution challenges such as audit technology and auditors’ feeling pressure to reduce hours and fees;
• Quality control systems and procedures and whether they align with standards.

Areas of uncertainty: Of course, this agenda assumes it will be business as usual at the PCAOB next year. But things may be different under the second Trump administration. As the Wall Street Journal reported, Trump’s pick for the next SEC chair, Paul Atkins, is a “longtime critic” of the PCAOB, who may choose to shake up the oversight board’s structure or leadership.