2025 marked a year of transition at the Public Company Accounting Oversight Board (the “PCAOB” or the “Board”), with a newly constituted Board, a new Chair, and a decline in enforcement actions compared to 2024. Amidst these changes, the PCAOB continued its long‑standing annual conversations between its Division of Registration and Inspections and audit committee chairs (a link to the full report summarizing these conversations is available here).

During 2025, the PCAOB interviewed more than 250 audit committee chairs, compared with 272 in 2024 and 230 in 2023. Of those interviewed, 82% served as audit committee chair of a public company audited by a U.S. Global Network Audit Firm. As in prior years, the conversations provide insight into how audit committees assess audit quality, oversee the auditor relationship, and approach emerging risks.

Key takeaways from this year’s audit committee chair conversations include:

• Communication and Continuity. As in prior years, audit committee chairs emphasized the importance of proactive and transparent communication in fostering an effective working relationship with the audit firm. Chairs cited regular touchpoints outside formal meetings, attendance at executive sessions, and availability for ad hoc discussions as contributing to more productive relationships and substantive formal meetings. Proactive communication regarding issues arising during the audit and updates on inspection status were viewed particularly positively. Discussions of critical accounting matters (“CAMs”) were common, with 90% of chairs reporting having such discussions with their auditors, often on a quarterly or ongoing basis, and most described these conversations as robust. Engagement team continuity was also viewed as an important factor supporting audit quality and relationship stability.

• Audit Committees Consider Multiple Factors – Including Inspection Reports – to Evaluate Auditors. Chairs described a combination of informal and formal tools to assess auditor performance. Informal discussions with management regarding audit quality, independence, and expertise continue to play a meaningful role. Formal mechanisms, including surveys and structured self‑assessments, were also commonly referenced. PCAOB inspection reports remain an important consideration, with chairs noting that deficiency trends and peer benchmarking provide particularly useful context in evaluating the auditor’s performance over time and in comparison to peer firms.

• Chairs Value Expertise, Transparency, and Communication in Evaluating Audit Quality. Strong centralized resources and access to technical specialists were noted as key indicators of audit quality. Chairs also pointed to open and constructive dialogue around PCAOB quality control inspection findings, including firm‑wide remediation efforts, as evidence of a firm’s commitment to continuous improvement. Clear and consistent communication regarding partner rotation, independence monitoring, and related quality control processes was viewed as especially important in reinforcing confidence in the audit firm.

• Pre-Approval Considerations. Chairs noted the value of receiving detailed information from management on the scope and cost of proposed audit and non‑audit services subject to pre‑approval. Implementing a conservative approach to non‑audit services and providing audit committee chairs with interim pre‑approval authority were cited as valuable governance measures.

• Fraud Focus Areas. Fraud risk discussions between audit committees and auditors focused on the effectiveness of whistleblower and hotline programs as key detection mechanisms, alongside continued attention to established risks such as management override and revenue recognition. Participants also highlighted growing concern around cybersecurity and technology‑enabled fraud, including the implications for data integrity and fraud detection.

• Artificial Intelligence Integration. Expectations around the use of artificial intelligence (“AI”) in audits continue to grow, though adoption remains measured. Discussions focused on how AI may affect financial reporting processes, the adequacy of related controls, and the implications for audit execution, including potential fee considerations.