Acting PCAOB chair defends embattled PCAOB

It’s been a fraught year for the PCAOB. In May, Republicans on the House Financial Services Committee advanced a measure that would have eliminated the board and folded its functions into the SEC (the provision was ultimately struck down by the Senate parliamentarian). Then, in July, chair Erica Williams resigned at the request of SEC Chair Paul Atkins.

But during a December 9 AICPA Conference session on the latest SEC and PCAOB developments, acting chair George Botic gave what sounded an awful lot like a defense of the board, emphasizing the work it’s done on behalf of capital markets. “A world without the PCAOB,” he said, would lack “three pillars of investor protection”: inspections, “new and revised auditing standards,” and transparency mechanisms such as Form AP and Critical Audit Matters.

“I believe each of these pillars has been a watershed moment for investors in the capital markets. If we consider what life would be like with their absence, I strongly believe investors would be worse off,” Botic, a CPA who’s been with the PCAOB since 2003, said.

Early inspection reports are promising: In 2024, the PCAOB helped foster greater audit quality, as firms lowered deficiency rates to 39%, down from 46% in 2023. This year deficiency rates should fall again, Botic said, noting that preliminary results from 2025 inspection reports “show a decrease in Part I.A findings from 2024” among both the six US global network firms and other annually inspected firms.

AI, PE could erode audit quality: But the auditing profession, Botic said, needs to remain wary of two developments that could threaten audit quality: AI and the rise of private equity ownership in accounting.

While AI shows promise in helping to “automate manual processes” and “making it possible to officially analyze entire populations in certain scenarios,” Botic said, he cautioned that too much reliance on the technology could “erode qualities that go to the core of what it means to be an effective auditor.” He cited an MIT study that found AI use “poses a risk to critical thinking” and warned that it could “threaten auditors’ professional skepticism and judgment.”

Botic also warned that private equity’s emphasis on short-term returns could “over time, begin to shift firm incentives so that profitability may outweigh audit quality.” And he expressed concern that the consolidation of firms fueled by private equity could shrink the auditing field, “thereby concentrating market power” among a smaller group of firms.

A noble profession: When asked about the Department of Education’s decision to leave accounting off a list of degrees considered “professional” for student loan purposes, Botic was quick to stand up for the field. “Accounting is one of the most noble professions we have, without qualification,” he said. “I don’t think another profession has the broader impact across the US and globally that the accounting and auditing profession does, and that’s why the work of financial statement auditors is so important.”