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PCAOB changes ahead – What they mean for auditors and preparers · PwC's accounting podcast

• 0:00
  SPEAKER_00: Thought leadership from PWC's National Office.
• 0:07
  SPEAKER_01: Hello.
• 0:08
  SPEAKER_01: Welcome to PWC's Accounting Podcast.
• 0:11
  SPEAKER_01: I'm Heather Horn.
• 0:13
  SPEAKER_01: Today we're diving into the PCAOB, a topic that's drawn increasing attention in recent years, with significant activity leading up to the change in administration, and as a result of that transition, significant changes expected on the horizon.
• 0:30
  SPEAKER_01: In this episode, we'll focus on what this all means for prepared.
• 0:36
  SPEAKER_01: Our guest host for today's episode is Diana Stoltzfist, a partner in PWC's National Office.
• 0:42
  SPEAKER_01: She's joined by Brian Croto, our U.S.
• 0:44
  SPEAKER_01: Chief Auditor, and a member of the PCOB Standards and Emerging Issues Advisory Group.
• 0:50
  SPEAKER_01: Both Brian and Diana previously served at different times as Deputy Chief Accountant of the SEC's professional practice group within the Office of the Chief Accountant, where each played a key role in the SEC's oversight of the PCOB.
• 1:04
  SPEAKER_01: Brian's been actively engaged in these developments and in discussions with stakeholders.
• 1:08
  SPEAKER_01: He brings a wealth of insight to today's conversation.
• 1:11
  SPEAKER_01: With that, let's tune in.
• 1:14
  SPEAKER_02: Hi, Brian.
• 1:14
  SPEAKER_02: It's so great to have you today on the podcast.
• 1:17
  SPEAKER_02: Excited to talk to you about the PCAOB and maybe some other topics as well.
• 1:21
  SPEAKER_03: Thanks, Diane.
• 1:21
  SPEAKER_03: It's always great to um be with you and to um take part in these podcasts.
• 1:25
  SPEAKER_03: So thanks for having me back.
• 1:26
  SPEAKER_02: I know we were just sitting here, you were enjoying a cup of tea and you were putting some honey in your tea, and then we started to talk about how you are a beekeeper, were a beekeeper.
• 1:37
  SPEAKER_03: Yeah, well, there's a story to that, of course.
• 1:39
  SPEAKER_03: And um I I did I did have a hive of bees.
• 1:41
  SPEAKER_03: I don't think you would call that an apiary, but I I did uh win in high school an essay contest.
• 1:47
  SPEAKER_03: And uh I at the time you had two options.
• 1:50
  SPEAKER_03: I don't remember what the second topic could have been, but one of them was why I want to be a beekeeper.
• 1:54
  SPEAKER_03: And I wrote an essay, and one afternoon I was home and the phone rang and I picked it up, and it was the Hamden County Beekeepers Association, and they um they said, Congratulations, you've won first prize in our essay contest.
• 2:07
  SPEAKER_03: And so uh they proceeded to tell me that first prize was a hive of bees.
• 2:12
  SPEAKER_03: And so I immediately said, Well, what's second place?
• 2:14
  SPEAKER_03: And uh what's the second place prize?
• 2:17
  SPEAKER_03: So um anyway, uh it turned out to be uh quite a learning experience.
• 2:21
  SPEAKER_03: There was uh an older gentleman at the time that um really brought me along and and helped me for the few years that I had the hive.
• 2:27
  SPEAKER_03: I won second prize, second or third place uh at the Eastern States Exposition for the quality of my honey one year.
• 2:34
  SPEAKER_03: I didn't I didn't extract a lot of honey.
• 2:36
  SPEAKER_03: It was certainly nothing, not enough to to to sell or those kinds of things, but I but I did give some gifts away to family and friends, and it was fun.
• 2:43
  SPEAKER_03: It was a a lot of learnings, a lot of bee stings along the way, a lot of smoke and the whole thing.
• 2:48
  SPEAKER_03: But uh yes, I I I was a beekeeper at one point.
• 2:51
  SPEAKER_02: Very cool.
• 2:52
  SPEAKER_02: That's that's so interesting, too, to learn how to take care of the hive and get the honey and everything.
• 2:58
  SPEAKER_03: Some someday we can get into a longer story about how you um replace the queen of a hive and the necessity to do that and how they deliver it to your home.
• 3:07
  SPEAKER_02: So I guess stay tuned for the next PwC Accounting slash beekeeping podcast.
• 3:12
  SPEAKER_02: There you go.
• 3:13
  SPEAKER_02: Well, Brian, I'm so excited uh to have you here today.
• 3:16
  SPEAKER_02: And we're gonna talk about a topic that I think you could you and I are both very interested in, uh as I'm sure our listeners are as well.
• 3:22
  SPEAKER_02: But we're gonna talk about the PCOB.
• 3:24
  SPEAKER_02: I know you were here last year and talked with Heather about the PCOB and what was going on as we sit here today.
• 3:32
  SPEAKER_02: I think the outlook is probably different from a year ago.
• 3:35
  SPEAKER_02: I thought maybe what we could start with, though, Brian, is the PCOB a couple years ago celebrated their 20-year anniversary.
• 3:41
  SPEAKER_02: So they've been around, you know, for a couple decades now.
• 3:45
  SPEAKER_02: Over that time, I think they're they faced a lot of scrutiny.
• 3:49
  SPEAKER_02: There's been some controversy over the years, even threats to their existence.
• 3:54
  SPEAKER_02: And so I thought maybe what we could start with is maybe you could just give us a little bit of the history of the PCOB and some of these challenges that they faced.
• 4:00
  SPEAKER_03: Yeah, happy to do that.
• 4:02
  SPEAKER_03: And and maybe I'm gonna start um because you've raised that from that perspective, I'm gonna start by saying something you'll hear me say a couple times.
• 4:08
  SPEAKER_03: I am a strong supporter of the PCOB, of um, of audit regulation, and and having a strong regulator and standard setter.
• 4:17
  SPEAKER_03: And um, from my perspective, strong, strong, strong when you think about standard setting inspections enforcement.
• 4:23
  SPEAKER_03: You probably hear that um me say that a few times today.
• 4:26
  SPEAKER_03: But I thought it's important to start there before I think.
• 4:29
  SPEAKER_02: I think I was just gonna reiterate.
• 4:30
  SPEAKER_02: I think we both think the PCOB is a very important part of the ecosystem, importance to you know the quality of financial statements, the quality of audits.
• 4:39
  SPEAKER_02: And I think I can say this, I would I would think you agree, the creation of the PCOB and looking at audit quality where it was before the creation, and if you look at where audit quality is today, a huge improvement in audit quality overall, maybe just to set the stage from both our perspectives.
• 4:55
  SPEAKER_03: Absolutely.
• 4:55
  SPEAKER_03: Quality is 100% uh no doubt better because of the PCOB over time.
• 4:59
  SPEAKER_03: That doesn't mean there aren't controversial things that have happened and there aren't things they could have or or could do in the future better.
• 5:04
  SPEAKER_03: And so maybe with that opening, it'll allow us to have maybe a very transparent dialogue about that.
• 5:09
  SPEAKER_03: Um so look, I mean, you you said it, they were established with um with SOX in 2002 and opened their doors, I believe, early 2003, and so it's been more than a couple decades.
• 5:20
  SPEAKER_03: And in that couple decades, without going through all the history, what I maybe focus on is I they've had a couple near-death experiences as an organization, and I'll talk about what those were, and then a couple of resets in the organization.
• 5:32
  SPEAKER_03: And um when you think about that, the first near-death experience was really in the June 2010 timeframe, well, but right before that, leading up to that, when the Supreme Court ultimately issued its decision, but there were there was a constitutional challenge that was brought forth.
• 5:47
  SPEAKER_03: And it really went to the uh amendments clause of the U.S.
• 5:50
  SPEAKER_03: Constitution and the um whether or not the SEC could remove at will board members, which it which at the time was for cause based on the reading of the Act.
• 6:00
  SPEAKER_03: And um, you know, really the the issue there went to uh again, how easily the the SEC could replace or remove at before the end of a term uh board members who they otherwise have full responsibility for appointing and oversight for.
• 6:16
  SPEAKER_03: And ultimately, it was determined that the the that aspect of SOX was unconstitutional.
• 6:21
  SPEAKER_03: And in fact, it was held that those provisions um making the board members only removable for cause were inconsistent with the Constitution's separation of powers.
• 6:30
  SPEAKER_03: And the consequence of that is that now PCOB board members can be removed at will, right?
• 6:35
  SPEAKER_03: Um and and that's happened now several times.
• 6:38
  SPEAKER_03: Now, before maybe the examples of that, I would just say, in my view, that has created a fundamental flaw relative to the way the organization is otherwise overseen and governed.
• 6:50
  SPEAKER_03: You know, I think it's been important over the years that the Sarbanes Oxley Act had a five-year staggered term uh for board members uh so that you'd have, particularly where you have a non-expert majority board, right?
• 7:02
  SPEAKER_03: Because you can only have as you can only you have to have two CPAs, no more than two CPAs uh on the board.
• 7:07
  SPEAKER_03: And so you'll you'll naturally have um three board members who are not CPAs.
• 7:12
  SPEAKER_03: And under that model, I think the um staggered terms have been particular were particularly important.
• 7:18
  SPEAKER_03: And now we've seen multiple times uh commission new commissions come in and fully replace the board.
• 7:23
  SPEAKER_03: Right.
• 7:24
  SPEAKER_03: And and you know, I'm not saying there aren't reasons that that's happened.
• 7:26
  SPEAKER_03: The first time it actually happened was because of the constitutional challenge.
• 7:29
  SPEAKER_03: Nobody was wanting to take a board seat when they didn't know what was going to happen to the PCOB.
• 7:33
  SPEAKER_03: There had been some deferral in the timeframe.
• 7:35
  SPEAKER_03: So, you know, the you know, first when you kind of think about the couple resets that I was gonna describe, the first one was really in 2017 under Jay Clayton as chair of the SEC, which was really this backlog.
• 7:46
  SPEAKER_03: And and and then the second was in 2021 with Gary Gensler, which um which you well know, which is relative to then um, you know, really what was viewed to be a response to that action at the time.
• 7:56
  SPEAKER_03: Right.
• 7:57
  SPEAKER_03: Um and and you know, when you when you look at the board members that were then, you know, in succession replaced um and and particularly under Gary Gensler, when some of them had only been there a very short period of time, including some very good board members like Rebecca Girata, Megan Zietzman had a lot of great experience to bring to bear, but only had very, very short tenures.
• 8:18
  SPEAKER_03: Um, then you had full new boards coming in that had to learn the organization uh and and get up and running fairly rapidly.
• 8:24
  SPEAKER_03: So it's shown that it's it's resulted in full replacements and that that's I think hindered the PCOB relative to um you know continuity, stability, ongoing effectiveness to a degree.
• 8:36
  SPEAKER_03: So it's um while while I'm not questioning the Supreme Court's decision by any stretch, um certainly I do think that that creates a fundamental flaw relative to the way it's been operationalized in terms of the effect of that change.
• 8:48
  SPEAKER_02: Yeah, I mean I think if you think about an organization in every four years, or the potential that every four years you have a major change in leadership and potential priorities, I think it just can make it challenging to have tier point continuity and continue to have those priorities over a longer period of time.
• 9:04
  SPEAKER_03: Aaron Powell Yeah.
• 9:04
  SPEAKER_03: And so now we've had a second near-death experience, the first being the constitutional challenge and then the couple resets with the full new boards, which then led to um really the lead up to uh under the Trump administration what then now has become the um one big beautiful bill or the Budget Reconciliation Act, where where there was debate about whether the PCOB and its function should essentially fully be ruled under the SEC.
• 9:28
  SPEAKER_03: Now, ultimately, that didn't happen under that bill uh for a variety of reasons.
• 9:32
  SPEAKER_03: It did pass the House to eliminate um the PCOB, but you know, however, there on you know on June 19th of this year, the Senate parliamentarian determined that the you know that the provision violated the Byrd rule and it was uh deemed to be extraneous, meaning that the provision ultimately um you know was was more about policy than it was about federal spending and revenues and and and and the like.
• 9:53
  SPEAKER_03: And so um the the big beautiful bill was signed into law on July 4th with no changes to the PCOB.
• 10:00
  SPEAKER_02: Okay.
• 10:00
  SPEAKER_02: So as of right now, we still have the PCOB with its current functions that that you and I are familiar with, that I th our listeners are familiar with.
• 10:08
  SPEAKER_02: So I think we've started to hear, though, of some changes that are already coming.
• 10:12
  SPEAKER_02: They've made some changes already relative to the PCOB.
• 10:16
  SPEAKER_02: They've had some actions that have started to come.
• 10:18
  SPEAKER_02: So maybe can you just walk us through what we're starting to see and then we can get into maybe what we see further down the road?
• 10:23
  SPEAKER_03: Yeah, look, I I think a lot of people were expecting radical change to happen immediately after the election relative to the PCOB.
• 10:30
  SPEAKER_03: It's not surprising at all to me, particularly given there was consideration of elimination of the PCOB, that the SEC let that play out a bit.
• 10:37
  SPEAKER_03: It's not it was not their role to make those determinations.
• 10:39
  SPEAKER_03: Congress was considering it.
• 10:41
  SPEAKER_03: Um, certainly to the extent they were being asked questions.
• 10:43
  SPEAKER_03: I'm sure they were providing whatever advice they might provide or answering questions they were getting.
• 10:47
  SPEAKER_03: But ultimately, and I think um Chairman Atkins at the time even said it, it's really not my decision.
• 10:51
  SPEAKER_03: And and we you know we could take it on if being if we were asked to by Congress, but at the same time, it's not my decision to make.
• 10:57
  SPEAKER_03: Um something to the that that effect.
• 11:00
  SPEAKER_03: And um and so I I I think they sort of waited for that process to end, but it didn't take long after that.
• 11:05
  SPEAKER_03: That was July 4th.
• 11:07
  SPEAKER_03: You kind of look at then the SEC.
• 11:09
  SPEAKER_03: In June, Kurt Hole took his um role as as chief accountant at the SEC.
• 11:14
  SPEAKER_03: For those who don't know Kurt, he certainly brings 40 years of experience on accounting and auditing in various roles that he's had, uh, including back when he was a partner at at EY.
• 11:23
  SPEAKER_03: I think more recently he was at uh Calarium Advisors, but back when he was at EY, including in um, you know, some key leadership roles, including their global role relative to regulatory risk and quality in the oversight function.
• 11:33
  SPEAKER_03: Um, when he came into his role, he he made clear very much his focus was going to be on you know being a k a pivotal time for the capital markets and looking to advance accounting and auditing policies that reinforce investor confidence, transparency, and support innovation.
• 11:48
  SPEAKER_03: But I think key to all of that, really focusing on um in in his use ways the PCOB could be improved.
• 11:54
  SPEAKER_03: Um you fast forward not very long to July 15th, where we saw the resignation of Chair Williams, and then she, you know, she'd agreed to stay on a week, basically, but um that that brought us to June 22nd, and then literally the next day on the 23rd, you know, the SEC had their nomination, their solicitation for nomination for all five board seats.
• 12:14
  SPEAKER_03: And so it's clear the SEC was moving ahead with this um kind of solicitation process, which presumably is what led uh to Chair Williams determining that she would resign.
• 12:24
  SPEAKER_03: And uh in the meantime, they've appointed George Bodick one of the one of the um, he's been on the staff at the PCOB for many, many years, I think um you know really almost since the existence of the P of the PCOB uh in various various roles in leadership roles, including most recently as the director of inspections, but also in um you know international role.
• 12:42
  SPEAKER_03: He became the acting chair uh in in in the interim and and we'll see what happens long term, whether he retains a board role or or or chair role, whatever might happen pro prospectively.
• 12:53
  SPEAKER_03: I think by all accounts, many believe that we'll see five entirely new board members, um, but I think there are some board members who certainly, maybe even all of them, who would like to retain their seats.
• 13:02
  SPEAKER_03: So um we'll we'll sort of see how that process plays out.
• 13:05
  SPEAKER_03: I I don't think it will be long before we'll find out.
• 13:08
  SPEAKER_03: I I do think um that there's you know there's a a process the commission goes through.
• 13:12
  SPEAKER_03: Obviously there was the nomination period which closed.
• 13:15
  SPEAKER_03: My understanding is there's probably a full slate that's being considered um internally by the SEC.
• 13:21
  SPEAKER_03: By the time some are listening to this podcast, it may um already be already be announced depending on when you're listening, but um I I think it'll it'll move fairly rapidly.
• 13:29
  SPEAKER_03: The one thing that can happen is sometimes if one or more board members that they're pursuing or nominees that they're pursuing ends up for some reason dropping out either through the through the vetting process or for whatever the reason might be, personal reasons.
• 13:42
  SPEAKER_03: There's lots of reasons that could happen.
• 13:43
  SPEAKER_03: You know, they may want to announce a full slate, that could cause them to delay, or they could proceed with some and not all, but it could take lots of twists and turns.
• 13:51
  SPEAKER_03: But I my sense is that they're eager to you know bring some finality to this and move it forward from an SEC perspective.
• 13:56
  SPEAKER_03: So I think we'll see some um some some movement here pretty quickly.
• 13:59
  SPEAKER_02: Yeah.
• 14:00
  SPEAKER_02: And I think typically we would see that October is typically when the the terms expire and are renewed.
• 14:06
  SPEAKER_02: So this will be um, and as as you said, for each of these appointments, they are, even though all five board members will be appointed at the same time, they will be filled either into the chair role or into one of these five-year staggered terms, even though we'll we'll see if they are able to fulfill their full five years or not.
• 14:24
  SPEAKER_02: And I think maybe just picking up on a couple of things, Brian, is one, you talked about Kurt Hole, the new SEC chief accountant.
• 14:31
  SPEAKER_02: He was actually on our accounting webcast, our Q3 accounting webcast.
• 14:36
  SPEAKER_02: I think he made some interesting comments that seem in the same vein as some of your remarks.
• 14:40
  SPEAKER_02: One, he talked a lot about the importance of stakeholder feedback and talking with stakeholders kind of across the ecosystem, which I think, you know, I'm glad to hear.
• 14:50
  SPEAKER_02: I think that will be great to make sure that a lot of voices are going into the process for both accounting standard setting and the process around the FASB as well as the PCOB.
• 15:00
  SPEAKER_02: And then he also talked about innovation and the markets and making sure that both the accounting and the auditing profession are able to be responsive to changes in technology, new products.
• 15:11
  SPEAKER_02: So I think that's some thing that's really positive to hear too, coming from um leadership at the SEC.
• 15:16
  SPEAKER_03: Yeah, it's I'm I'm glad you mentioned that.
• 15:18
  SPEAKER_03: And um look, I mean, I've had the chance to meet with Kurt a bit, and I I I've known Kurt a very long time.
• 15:24
  SPEAKER_03: I don't think that he he he would mind me saying that back when I was in my deputy role, and I know you've served in the prior deputy role that I served in at the SEC, Kurt's someone that would go out of his way to uh come in uh to the to the SEC staff and talk about what's going on from a profession perspective, risks that he's seeing, ideas that he has, just like a lot of other um constituents would, but in a uh a way that really was trying to be constructive and wanting to, you know, make sure that that from uh uh you know an SEC perspective, there's a focus on appropriate focus on investors and reliable financial reporting and really advancing the mandate.
• 15:56
  SPEAKER_03: And I probably even should have mentioned earlier, I mean, one one of the key roles Kurt had early in his career is uh, you know, I believe it was associate chief uh associate chief accountant in Corp Fin, but he had a Corp FIN role for a good number of years at the SEC.
• 16:08
  SPEAKER_03: So he's been on the SEC staff, knows the FASB very well.
• 16:11
  SPEAKER_03: So there's a lot of um a lot of real benefits to having someone who has the the nature of experience that Kurt has coming in into that role.
• 16:18
  SPEAKER_03: And I I trust that we'll see a lot of a lot of great things happen uh as a as a result of that, and I'm sure that he'll work very well with whoever the new board would be from a PCOB perspective uh relative to uh advancing investor protection and quality audits.
• 16:31
  SPEAKER_02: That's great.
• 16:32
  SPEAKER_02: Great to hear.
• 16:33
  SPEAKER_02: Well, we've talked a lot about all this change at the board level.
• 16:36
  SPEAKER_02: Maybe, Brian, can you give us some thoughts on what you think the effect will be on the PCOB's future activities?
• 16:43
  SPEAKER_03: Yeah, so it's um the SEC certainly has plenary oversight and even um greater oversight ability now with with the removal provisions, as I mentioned earlier, but but always had plenary oversight.
• 16:54
  SPEAKER_03: That that goes right from establishing the budget that the PCOB establishes, where the SEC has to approve it, the fact that they have to approve any rule or standard before it can become finalized, uh, the role that they have in the inspections process relative to um what's not used very frequently, but it's um the interim review rule.
• 17:11
  SPEAKER_03: I think it's called it's under Rule 140 of Regulation P, where um it it's it's sort of an appeal type process if if if one wanted to avail themselves from an inspections perspective to the SEC.
• 17:21
  SPEAKER_03: Just the fact that it that exists is important even if people don't use it relative to the oversight role.
• 17:26
  SPEAKER_03: And then uh the coordination that they do on enforcement and and the oversight that they do relative to that uh as as well.
• 17:32
  SPEAKER_03: So real really um plenary oversight from from from the budget process all the way through all of the very aspects of everything they do.
• 17:40
  SPEAKER_03: But the budget process is one maybe um Diana to spend just a little time on.
• 17:44
  SPEAKER_03: That's another one under Reg.
• 17:46
  SPEAKER_03: Not a lot of people probably read Reg P, but you and I in our former roles know Reg P pretty well.
• 17:50
  SPEAKER_03: Um there's there's a couple of rules under Reg P about how the SEC regulates the P and oversees the PCOB.
• 17:56
  SPEAKER_03: Um I was there when we were developing those rules.
• 17:59
  SPEAKER_03: Um back at the time, Bob Burns was our chief counsel in OCA, and we spent a lot of time with a lot of folks really trying to think about process around um, you know, good governance and oversight.
• 18:09
  SPEAKER_03: And the budget rule uh is is an interesting one under Rule 190.
• 18:13
  SPEAKER_03: And I'll just mention a few things under it because I think um people have a lot of interest in well, what's happening right now with the PCOB budget and how will that change over time?
• 18:20
  SPEAKER_03: And so the process is very interesting, and it's one that starts very early in the year and actually starts in March, where the first thing the PCOB does is they submit a narrative to the SEC staff, and and and that that's the beginning of them describing what they see as changes coming relative to their outlook for the budget year.
• 18:36
  SPEAKER_03: Then by the end of April, the SEC provides uh economic assumptions and some general budgetary guidance back to the PCOB.
• 18:44
  SPEAKER_03: So by the time you get to July, the PCOB is submitting a preliminary budget to the SEC.
• 18:49
  SPEAKER_03: And then in the August and through October timeframe, there's a lot of dialogue between the staff of the SEC and the PCOB, going through the budget areas and understanding uh it in detail and ultimately getting to a point where the staff make a recommendation to the commission by October 31st on what a pass back letter will look like to the PCOB.
• 19:08
  SPEAKER_03: That's all non-public, that process, uh the results of that process.
• 19:12
  SPEAKER_03: The process itself is public, I'm describing to you, but the um the actual pass back letter that would go would not be public, for example.
• 19:18
  SPEAKER_03: But that provides kind of the commission's views relative to the preliminary budget by October 31st.
• 19:24
  SPEAKER_03: Then the PCOB statutorily, by this rule, has to, by November 30th, approve a budget, which then ultimately the commission has to approve or reject on or before December 23rd.
• 19:34
  SPEAKER_03: Uh and that would be that would then set the budget for the following year.
• 19:37
  SPEAKER_03: So I know that's a lot of detail, but I think that all just shows there's a lot of back and forth.
• 19:40
  SPEAKER_03: It's iterative, there's involvement and interaction between the PCOB and SEC staff and up to the commission, where there's a couple of checkpoints where the commission's weighing in and voting on something that would go back to the PCOB.
• 19:52
  SPEAKER_03: So all that's in motion right now.
• 19:55
  SPEAKER_03: Um the rubber really starts to hit the road when you start getting to the pass back letter on October 31st.
• 20:00
  SPEAKER_03: Um that that's where you really start to get to a point where if there are a difference of views between the organization, they're sort of working those out so that the PCOB can get to their November 30th date.
• 20:10
  SPEAKER_03: So that's all going to happen without us knowing very much about it.
• 20:13
  SPEAKER_03: But then at some point you'll have the PCOB probably in an open meeting as they usually do, sometime uh before November 30th, sometime during that month, uh adopting their budget publicly, which is when we'll get a first look to get a sense for how significant or dramatic the changes might be, at least from a budgetary perspective.
• 20:28
  SPEAKER_02: Yeah, and I think when you look back over the past few years too, Brian, we've seen a lot of change in the budget and a lot of growth at least over the past few years.
• 20:37
  SPEAKER_02: Uh inspections has grown a lot in the number of people that they've had in their budget overall and building out some of their different functions.
• 20:44
  SPEAKER_02: So it'll be interesting to see with this year's budget how they're changing, because at least in my mind, it gives a sense as to where the priorities are.
• 20:52
  SPEAKER_02: There usually is discussion at this open meeting that you're talking about about where the priorities are and priorities and people align a lot of times with the number of requests that they have.
• 21:01
  SPEAKER_02: So I think it will be interesting to see uh what this year's budget looks like.
• 21:05
  SPEAKER_02: So I know one of the things that we've talked a lot about is um, you know, over the past few years, Chair Williams was very active in a number of different areas, but one of the priorities under her leadership was standard setting and modernizing the standards.
• 21:22
  SPEAKER_02: I don't know how many people follow it that closely, but initially when the PCOB was created, they took over the AI CPA standards, but were charged with being the standard setting for auditing standards.
• 21:34
  SPEAKER_02: And so they've started to modernize those over the past number of years.
• 21:38
  SPEAKER_02: But there's still a number of standards that that date back to that time.
• 21:41
  SPEAKER_02: And so that was one of the things that she really prioritized was modernizing some of those standards.
• 21:47
  SPEAKER_02: And so, you know, as we think about a new board coming into place, that's typically an area where we see focus as to what their standard setting agenda looks like.
• 21:56
  SPEAKER_02: But maybe just before we get into the details of standard setting, maybe from an overall perspective.
• 22:01
  SPEAKER_02: Can you share what you think maybe if there's going to be a kind of change in directions, what you think that might look like?
• 22:07
  SPEAKER_03: Yeah, it it's a it's a great question and and implicit in a lot of your question or a lot of observations that there are probably there's probably room for some improvement and changes to the way things are done.
• 22:17
  SPEAKER_03: And that's true for any organization.
• 22:18
  SPEAKER_03: But I do think here I think I think it's likely we'll see some fairly significant change in terms of how the PCOB goes about its standard setting.
• 22:26
  SPEAKER_03: So by the way we should go back before I get into the detail of that to um you know the the budget reconciliation bill we were talking about, while the PCOB will continue to exist, some continue to ask the question about well, would the SEC ever consider designating standard setting to some other body?
• 22:43
  SPEAKER_03: And now you know that has to be worked through if they if that if they were going to do something like that.
• 22:46
  SPEAKER_03: There's certainly provisions in in SOX relative to what the PCOB can do or should do from a standard setting perspective.
• 22:52
  SPEAKER_03: But I also think there may be provisions that would allow for degrees of designation.
• 22:55
  SPEAKER_03: There's certainly the ability for involvement of others and beyond the way they're using advisory groups today, both their CAG and IAG or any other advisory group or or the way they may interact with other standard setters.
• 23:09
  SPEAKER_03: So there's a lot of different models that could come out of what you know the way it's done today being different.
• 23:15
  SPEAKER_03: But I think let's assume for a moment that it's kind of business as usual relative to at least the structure of it.
• 23:21
  SPEAKER_03: I I would expect a much less insular process where um even in setting the agenda to begin with, there'll be presumably I would think a lot more public input and a lot more maybe even public debate and then ultimately a better understanding of why matters are on the agenda, including what's the problem we're trying to solve, what's the kind of basis for for that from an inspection perspective, enforcement perspective, or or from a feedback perspective relative to advisory bodies and others that would have opportunity for input.
• 23:53
  SPEAKER_03: And then I would think hopefully more transparency in in the process.
• 24:10
  SPEAKER_03: And so oftentimes you know upfront in the early stages of of projects you might have a lot of public debate and input but then you kind of get to a point where it's it's silent and then you just see a proposal come out.
• 24:21
  SPEAKER_03: There's comment letters on that but then not a lot of dialogue on well what what were the issues and how might the issues be resolved and what alternatives are there to resolve those issues.
• 24:30
  SPEAKER_03: There's not a lot of dialogue on that some of the more controversial proposals that were out over the recent years, for instance the NoClar uh proposal, finally there was a round table there was a lot of pressure to get to that round table where there was some degree of public dialogue at least at that point.
• 24:46
  SPEAKER_03: But that was sort of a big deal to have that round table as opposed to normal course that you would just have discussion about the kinds of comments that you got.
• 24:53
  SPEAKER_03: So I I would expect a a much more transparent process, a lot more room for dialogue and input.
• 24:59
  SPEAKER_03: And of course the you know the board will still make their decisions but hopefully with um a lot more transparency as to why the decisions are being made and with a lot more hopefully input into the process by all stakeholders relative to pros and cons and alternatives.
• 25:12
  SPEAKER_03: You know ultimately the monitoring that's done from an inspections perspective and and and the learnings from enforcements will will will feed in in a maybe even a more transparent way as as well.
• 25:23
  SPEAKER_03: So and I don't mean to as I said at the outset I don't mean to be overly critical because I'm not suggesting those things didn't happen to extents certainly under the current board and under prior boards but I think there's a lot of room to do that in a in a way that is much less sensor and much more transparent and and hopefully improves the overall effectiveness and efficiency of their standard setting.
• 25:43
  SPEAKER_02: Right.
• 25:44
  SPEAKER_02: And I think just to your point Brian I think when you look at other standard setting bodies they're a little bit of an outlier in their process relative to others.
• 25:52
  SPEAKER_02: So Brian I think when we look at the PCOB short term agenda there's still a number of projects on there.
• 25:57
  SPEAKER_02: You mentioned noncompliance with laws and regulations or noClar.
• 26:01
  SPEAKER_02: That's caused a lot of controversy when it came out I think similarly with firm and engagement performance metrics we didn't see a proposal ongoing concern but there's a lot of questions around where they're where they would be going with that.
• 26:13
  SPEAKER_02: So I think a lot of projects where there's still a lot of questions and and to your point maybe a little bit too what are the what's the problem we're trying to solve here in many of those cases and and what is the need for this standard setting.
• 26:25
  SPEAKER_02: So maybe we can spend a minute just thinking about what is still on the short term agenda.
• 26:30
  SPEAKER_02: I know the PCAB has maybe done a couple things relative to these projects even under you know the in this interim period but maybe you can talk a little bit and where you see it going.
• 26:39
  SPEAKER_03: Thanks Diana and and and you're you're you're right I mean a lot of these have had um have been thorny and the process has been um challenging at times and and and controversial for sure and and maybe just before I get into each project um relative to the kind of looking ahead just a couple reminders I mean we had a situation where the board had actually adopted firm engagement uh level metrics and then and then sent it to the SEC only to retract that and pull that back and now that's sitting on a shelf.
• 27:04
  SPEAKER_02: And I think that's the first time that's ever happened.
• 27:08
  SPEAKER_03: For sure it is yeah it is the first time that's happened.
• 27:10
  SPEAKER_03: And then you have NoClar that made it very far but they've put that on the shelf again with change in administration it's not surprising that there would be differing views and some of that might happen but um those are those are projects that were uh fairly far along that that now are now are sitting on the shelf for the moment anyway.
• 27:26
  SPEAKER_03: And then you look at projects like like a Go and Concern like you mentioned where you know you you got pretty far on that and and and and then you know years and years ago the PCOB decided not to proceed with that and which means it's not the standard is not fully aligned to the accounting standard and um and and 10 cap A from a an SEC perspective.
• 27:44
  SPEAKER_03: So I I you know I think um you know we'll we'll we'll hopefully see some closure to some of these and some advancement of where they should be advanced, some advancement I I should also mention the quality control standard that just got deferred.
• 27:57
  SPEAKER_03: You look at some of the controversy around around that there was a provision put in for what you know this EQCF, this engagement quality review function, and a sort of an external monitor in some ways almost that got added to the to the standard that was very controversial and ultimately um the PCB wrote you know a 20, 28 page letter to the SEC in their in their process to further explain what was intended and not and provide clarity because it was not clear as to what the expectations for the role would be that was one too, right?
• 28:25
  SPEAKER_02: Where that provision was added after the initial exposure.
• 28:28
  SPEAKER_03: So again not at the comment period really came through the SEC's process versus the PCAOB Yeah I think there were changes that made it made it more challenging to understand and then and then we had another standard under technology procedures this 10 cap A paragraph of it that a lot of people are struggling with still now waiting for guidance but that's another example of one where it got changed in the in in sort of the process of getting to the final standard without public input and and then significant comment was you know was was comment letters were sent to the SEC and the SEC actually instructed the PCOB to issue guidance um to make clear how a risk-based approach would apply and make clear what the expectations were and um and meanwhile the cost benefit analysis has kind of uh you know said it's not really much of a change but um but when you read the little literal words it's hard to get there and yet now we're fairly far from the approval of that and um we we still haven't seen guidance although I I do suspect something is probably forthcoming.
• 29:21
  SPEAKER_03: But when you look at that, you know it it has been challenging on the standard setting front a lot of time and energy by the PCOB, by all the constituents involved in providing feedback, tremendous amount of time and effort and I'm not saying that there weren't good outcomes from that, a lot of vetting of issues, a lot of good ideas, um, but ultimately got getting to a point where there wasn't a lot of consensus relative to the conclusions that were reached on some of the more controversial aspects of some of those projects.
• 29:46
  SPEAKER_03: There were some aspects you take quality control standard I think the large majority of that people were very comfortable with well aligned to the international standard but there were certainly enough provisions incrementally that cause concern.
• 29:58
  SPEAKER_03: So you know look where will this head I I you know it's hard to know but I could envision if you kind of rattle through them fairly quickly engagement and firm metrics.
• 30:06
  SPEAKER_03: I could envision the board issuing a statement someday or staff document that describes the role the audit committee has relative to considering firm and engagement metrics and making clear that there should be degrees of discretion as to what would be appropriate in the context of their oversight role and then putting it more on audit committees relative to their audit committee report in terms of informing investors as how they've fulfilled that mandate.
• 30:27
  SPEAKER_03: I think that would be more consistent with kind of the responsibilities of each party today versus providing all these firm and engagement metrics and expecting investors to somehow use that relative to informing their views on audit quality.
• 30:39
  SPEAKER_03: I, you know I I I I know it's hard enough on our for us as auditors on the individual engagements that we're actually involved with to use those metrics at times to really make sense from a quality perspective without a lot of context.
• 30:50
  SPEAKER_03: So it's always been perplexing to me how much focus there's been on getting that information to to investors.
• 30:55
  SPEAKER_03: And I'm I'm all about transparency.
• 30:57
  SPEAKER_03: I love transparency and there's a lot of spaces where I think transparency has been enormously helpful but that's one where um I've been a little perplexed at the amount of cost that would be incurred relative to potential benefit.
• 31:08
  SPEAKER_03: So I could see that kind of an approach.
• 31:10
  SPEAKER_02: Yeah and I think one other thing Brian I think if there was five, ten metrics and that you could guarantee that if you hit these metrics and you you got this indicator that that could indicate that you that said that you had a high quality audit, I think we would every auditor would be happy to to have that to know exactly what to focus on.
• 31:28
  SPEAKER_02: I think that's the challenge in this environment is it's not that straightforward and there's facts and circumstances companies are different.
• 31:33
  SPEAKER_02: I mean you know there's a a ton of different indicators as to why things are influence and change.
• 31:38
  SPEAKER_03: So and meanwhile we you know as a as firms you're responsible for having you know um programs to monitor quality the PCB has their role relative to quality you have inspection reports.
• 31:47
  SPEAKER_03: I mean there's a lot of places that that stakeholders can look relative to understanding the results of quality and and you look at like our audit quality report and the transparency we put around that.
• 31:55
  SPEAKER_03: But anyway so you know that could that could be a path forward.
• 31:59
  SPEAKER_03: You think about something like NoClar and I could easily see almost a reset of taking the current standard and maybe improving upon that a bit.
• 32:08
  SPEAKER_03: I think there are some areas that we you know we've had in our comment letters where there are some things that could be done to make more clear um when you become aware of noncompliance the effect it has on other aspects of your audit, on your view of the control environment.
• 32:19
  SPEAKER_03: Now we do that and it's in our policies today but the standards could could expand on that.
• 32:24
  SPEAKER_03: So there are things like that but I think that would be more marginal versus the kind of more radical change in in scope and and obligations of of auditors who are not expert and are not lawyers relative to compliance with law and regulation and in many ways would go beyond what management's required to do.
• 32:38
  SPEAKER_03: So I could see a complete reset but wanting to move that forward so it's written in the context of their existing standards and brings closure to the project.
• 32:46
  SPEAKER_03: So I could I could see that as a path forward on a project like that.
• 32:50
  SPEAKER_02: Yeah I I totally agree with you I think I think with each of these that that we're going through Brian I think there's pieces of it that make sense from what they've proposed.
• 33:00
  SPEAKER_02: I think a lot of the risk assessment procedures that were built into no Clara I thought many of those were reasonable.
• 33:05
  SPEAKER_02: And so I think hopefully my hope is that standard setting doesn't stop because I do think we've seen that sometimes under resets under certain boards that it's really slowed down or accelerated under others that hopefully it keeps pace.
• 33:18
  SPEAKER_02: I think we'll talk a little bit in a minute about technology and impact technology is having on audits and I I hope we don't you know I think there are changes to make it easier there's a lot of technology out there.
• 33:29
  SPEAKER_02: We think a lot of it can come into the audit and making sure that the auditing standards aren't prohibiting that I think is important.
• 33:34
  SPEAKER_02: So I hope that we continue to move forward in in a number of these aspects.
• 33:38
  SPEAKER_03: Yeah I couldn't agree more while some of what I'm describing sounds like marginal and bringing closure closure to projects which is important and going concern is another one I mentioned.
• 33:45
  SPEAKER_03: So if you kind of tick through QC you need to finalize in some in some way probably I would think with with hopefully some degree of of change relative to addressing some of the implementation concerns and some of the issues that um that that maybe have come to fruition from comment letters that now we've seen manifest as as being challenging in in adoption same as I mentioned bringing no clear to closure the the technology assisted procedures um and an audit evidence piece of it relative to that 10 cap A paragraph you you know all you know firm engaged metrics a lot of that sounds like bringing things to closure but then to your point once we move on from some of that or at the same time you can be doing some some of these other things it the time has come relative to both AI and crypto and crypto in particular there's a changing regulatory environment.
• 34:28
  SPEAKER_03: I think um you know it it is a space where there are certainly degrees of risk that need to be appropriately considered and and while the AI CPA has made a lot of progress relative to guidance that they've issued the PCOB has been fairly high level relative to the nature of the guide the guidance or at least alerts that they've issued spotlights that they put on it kind of thing but I I I think the time has really come to see that advance more formally and have a more level playing field so there's a consistent understanding across the profession when you get into safeguarding of assets and sole ownership and those types of topics is it different if you're an integrated audit, non-integrated audit, AI C P A B versus PCOB, and how far does one go?
• 35:06
  SPEAKER_03: Because you can you can have a range of views on that and and and and and you know depending on your perspective think that what you're doing is sufficient to supporting an opinion and some of it goes to recognizing there are going there are risks relative to digital assets that you know you have to decide how far in in in the context of reliable financial reporting should management and the auditor go relative to addressing trying to address some of those risks.
• 35:33
  SPEAKER_03: So I think there's a lot there's a lot there that that that could be done and should be done for a level playing field and to provide degrees of certainty and it seems like we've got uh an administration who really wants to focus on those kinds of things.
• 35:44
  SPEAKER_03: So I do I do expect the SEC and PCOB probably to pick up and move forward on things like that.
• 35:49
  SPEAKER_03: On the AI front, uh particularly generative AI, there's a lot that's moving quickly relative to finding responsible ways to embed the use of AI in audits.
• 35:58
  SPEAKER_03: In fact I just came from filming our quarterly webcast for 3Q and and we we spent again a good amount of time on that as we advanced that within our firm.
• 36:07
  SPEAKER_03: And um you know it really comes down to making sure that the information that's being used is reliable, that you're uh you've got the right human and the loop involvement in terms of you know unassisted self-reviews or or the right levels of review if there is our degrees of reliance, making sure there's appropriate basis for those degrees of reliance and that you're having the right communications among your engagement team, that you're having communications with component teams and with audit committees hugely important.
• 36:30
  SPEAKER_03: And um yet the standards don't really address any of that per se.
• 36:34
  SPEAKER_03: The FRC in that space by the way did issue what I thought was some very interesting guidance.
• 36:40
  SPEAKER_03: It's not authoritative they said in the way they've issued it but certainly as you look at the examples of documentation and some of the risks and the like I thought um you know very very informative at least we've done a lot in terms of firm policy but you know I do think this is a space that we'd like to see both the AI CPA and PCOB advance.
• 36:57
  SPEAKER_03: In fact our comment letter to the AI CPA on their strategic agenda called this area out both crypto and AI but called AI out as an area that we do we do think the time has come to see that advance a bit.
• 37:08
  SPEAKER_03: We don't want to see it get in the way of you know good progress relative to using technology but at the same time I think it's good to point out the risks and make more clear how existing standards need to be applied relative to making sure that we're still getting the reasonable assurance and not introducing inappropriate risks relative to our audit work.
• 37:26
  SPEAKER_02: Sure.
• 37:26
  SPEAKER_02: Well I think that's really helpful.
• 37:27
  SPEAKER_02: Maybe we can shift gears a little bit Brian I know we talk about inspections sometimes people think about inspections and think about you know that being relevant for the audit firms but really when we think about inspections I think we've seen over the years that really it has an impact kind of across the ecosystem as to what the areas of focus are, what the expectations are around managed process and the auditors as well.
• 37:50
  SPEAKER_02: So maybe any thoughts that you have on changes to the inspections program that we might see?
• 37:56
  SPEAKER_03: Yeah so again I'll caveat it by saying that um that that look these are ideas and and I very much look forward to seeing the public vetting that'll be a lot of great ideas that a lot of people will have new board members will have um but but nonetheless um you know in the interest of brainstorming around that I do I do think that we'll see change.
• 38:16
  SPEAKER_03: I mean one of the areas people talk a lot about is over time could there be more focus in reliance on firm systems of quality management, reducing the number of engagement level inspections that are conducted I I think that's that's certainly worth worth worthwhile in terms of consideration.
• 38:32
  SPEAKER_03: Thinking about things like finalizing the scope of a permanent PCOB broker dealer inspection program.
• 38:37
  SPEAKER_03: It's been a long time since they've put their temporary rule in place.
• 38:40
  SPEAKER_03: I think that's important.
• 38:41
  SPEAKER_03: And then when you look at kind of the execution on inspections um you know from from from my perspective like they have um from a PCOB perspective tried to finish at least for the larger firms you know inspections by the end of August each year but then the timing for inspection reports is a lot less certain it would seem to me if you're done by August perhaps sometime in the November December timeframe maybe there could be a deadline for issuing the report from that year in terms of there being some consistency to that.
• 39:08
  SPEAKER_03: You certainly when you look at um whether it be auditor independence or accounting you know firms can't really engage with SEC staff although those are important areas for issuers as well issuers can always engage how they may want with the SEC but it's hard to engage from a firm perspective on accounting and and independence issues with the with the SEC staff.
• 39:29
  SPEAKER_03: So it can mean that some of those types of matters if they get raised as questions in the inspections process or potential issues can some sometimes um you know linger a bit in terms of being able to be resolved.
• 39:39
  SPEAKER_03: I think there's probably ways to try to fix that problem um recognizing you know PCB would have a role that's different than the SEC and it's it is a little bit complicated but there's probably some things that can be done there in terms of improvement.
• 39:51
  SPEAKER_03: And then in inspection reporting there have long been calls to continue to try to evolve the inspection report with a lot of credit to the what the board has done relative to improving the inspection reports.
• 40:00
  SPEAKER_03: I think you might have been involved in some of some some of that time frame and and I you know I but I but I think a lot of credit to the board relative to the transparency they put around I think people still struggle with understanding relative severity of comments and what the nature of it means, what the impact of it might mean how they should think about um what what the inspection reports are telling them.
• 40:19
  SPEAKER_03: Again I have I I I think there's a there's progress that can be made there'll be differing views that all have merit on that because um there's pros and cons to a lot of that but I but I but I fully embrace that um exploring more in that space is probably a good thing to do.
• 40:34
  SPEAKER_03: So look I mean I I think that that's just you know rattling a few ideas and examples off but there's a lot that probably could be done to bring in consistency as well you know when we conduct our audits we're obviously following a set of auditing standards under a set time frame under a set of standards getting to reasonable assurance.
• 40:50
  SPEAKER_03: I know that's not the inspection purpose or function or or requirement um and it's hard.
• 40:56
  SPEAKER_03: They have a very hard mandate at the PCOB relative to to uh the inspections program.
• 41:01
  SPEAKER_03: But um you know over time they've learned a lot just trying to make sure that there's um sufficient consistency and and and again credit there to the centralized program that they've put in place to try to look at issues as they're percolating and make sure they're considering them consistently across firms.
• 41:14
  SPEAKER_03: But I think the underlying performance of individual inspections, you know, the more they could do to bring some consistency there, I think that that could be an area of focus as well.
• 41:23
  SPEAKER_02: Yeah, I agree.
• 41:24
  SPEAKER_02: One area I always thought which you touched on Brian was this maybe degrees of severity.
• 41:30
  SPEAKER_02: I think right now you know it's a very much a passfail model and thinking about is there ways to give a little bit more insight into which ones are more severe than others.
• 41:38
  SPEAKER_02: And I think you know we always improve through feedback but when it's kind of a pass fail that feedback is a little bit harder than maybe just you know constructive type feedback.
• 41:47
  SPEAKER_02: But I we'll see what happens with that.
• 41:49
  SPEAKER_02: I'm sure you and I could come up with a lot of great ideas.
• 41:52
  SPEAKER_03: Yep and a lot of other people as well and and important and importantly they should provide and when there's I suspect this you know whether it's current board members or or new board as things evolve I suspect there'll be a lot of opportunity for that kind of input as they as they rethink um how they're applying the provisions of SOCs, their rules, their mandate um so so people who have ideas should really um really think about ways they can provide those and um whether that be because they're involved more formally or or unsolicited to the PCOB is fine too.
• 42:20
  SPEAKER_03: I'm sure that they'd be glad anytime many board members and staff are always glad to to hear from from from constituents.
• 42:26
  SPEAKER_02: So um I I think that's an important reminder too and I think we've seen too they've put out recently every year they have a refresh of their IAG and their CAG which are their two existing advisory groups so their investor advisory group, the standards in emerging issues group.
• 42:44
  SPEAKER_03: I think that's the the the It is yep and now that and now that you've said it now and I said it earlier so let me and now I have to give my disclaimer that my views today are my own not necessarily those of the CAG or anyone or the or the PCOB board or anyone at the PCOB I'm required to give that disclaimer anytime that I'm speaking about the PCOB or these types of topics in the CAG comes up since I am a CAG member.
• 43:04
  SPEAKER_02: I'm also on the Emerging Issues Task Force of the CAG but obviously today as always these are my own views and not the views of their organization or or the CAG Yeah I was just saying those groups are soliciting for new members too so I think we'll see some fresh ideas coming in I think every December is when they have a portion of their that that group new members coming on.
• 43:25
  SPEAKER_02: So it'll so I think this is another time where we could see some new voices coming in which is always great to hear other perspectives.
• 43:32
  SPEAKER_03: That's right and and at least the current board has put in term limits um two two terms or the max and and staggered terms there with with um you know a couple cohorts kind of things so you do to your point um at least the way they're doing it now you do see rotation in that but but no one should feel and and and certainly I encourage encourage people interested to raise their hand for those things, nominate themselves, get involved, but no one should feel restricted by that in terms of their ability to provide good feedback to the PCB either through their board members and staff otherwise but it's a great Point.
• 44:00
  SPEAKER_02: Yeah.
• 44:01
  SPEAKER_02: And maybe just one more thing that we heard from um Kurt Hole in our discussion yesterday was he was uh as I said, he's interested in feedback across the ecosystem, but he did talk specifically too about the PCOB.
• 44:14
  SPEAKER_02: And you know, I think the SEC has a long history of interaction with stakeholders and preparers feeling comfortable coming and talking to the SEC and others within the ecosystem.
• 44:23
  SPEAKER_02: And so having a similar model at the PCAOB, which I think at times has been more or less so receptive to kind of that more informal feedback.
• 44:32
  SPEAKER_03: Yeah, I think that's I think that's absolutely right.
• 44:35
  SPEAKER_02: Okay.
• 44:35
  SPEAKER_02: Well, Brian, maybe as we wrap up here today, I think we've talked a lot about our different views.
• 44:41
  SPEAKER_02: You know, really happy to hear your perspectives on these different things and sharing what's going on with the PCAOB.
• 44:46
  SPEAKER_02: But maybe we can we can focus a little bit on your role as the chief auditor here at PWC.
• 44:52
  SPEAKER_02: And, you know, what are you focused on during this time?
• 44:56
  SPEAKER_03: Okay, well, we could probably do a whole other podcast on this, um, Diana, but uh, it's a great, it's a great question.
• 45:00
  SPEAKER_03: There's a there's a lot going on um in the ecosystem.
• 45:03
  SPEAKER_03: When you look at the degree of regulatory change, all the things we talked about today, and thinking about the implications of that, when you look at risks to reliable financial reporting or the effects of uncertainty that we're dealing with in the current environment, tariffs is one that we spend a lot of time on, making sure our teams and others are focused on it, taxes and some of the changes coming there, um which you know, the accounting webcast reference is another good one there for those interested.
• 45:24
  SPEAKER_03: Um, but making sure from an auditing and interim review perspective, we're um we're staying abreast of those issues and staying on top of those and and doing what we need to do from an auditing perspective.
• 45:33
  SPEAKER_03: Um and then um, you know, we talked about some of these, but just to be sure, I mean the effect of Gen AI and the audit, the use of technology, we're moving rapidly as a firm.
• 45:41
  SPEAKER_03: Um obviously that we spent a lot of time on that and making sure what we're doing, we're doing responsibly with the right guidance and training and monitoring around those types of things.
• 45:49
  SPEAKER_03: Um uh and then the you know, the crypto space is a space that clearly uh with the changing regulatory landscape and um increase in use cases in that space, um, we're spending increasing amounts of time on.
• 46:00
  SPEAKER_03: And, you know, look, we're um, you know, when when you step back from all of all of that, we're also very focused on our apprenticeship model.
• 46:08
  SPEAKER_03: We're very focused on uh how do we think about people who grow up in the profession these days, which is very which is very different than the way you and I grew up in the profession.
• 46:16
  SPEAKER_03: What's the experience that they have really in their career?
• 46:19
  SPEAKER_03: How do we make sure they're getting the right experiences that that grow them into the people that um whether they stay with our firm eventually or go somewhere else, are gonna be uh fantastic contributors relative to promoting reliable financial reporting and and whether that be as a preparer, as an auditor or otherwise.
• 46:35
  SPEAKER_03: And so um, you know, I I there there's there's just a ton, uh Diana, but you know, it's um it's a fascinating time to be doing all this.
• 46:43
  SPEAKER_03: I I um I I I love it because there's uh it's interesting, it's exciting, it's meaningful, it matters.
• 46:49
  SPEAKER_03: Right.
• 46:49
  SPEAKER_03: Um, and um and you know, we get we get lots of um inquiries on on a lot of these things, and it just shows that it's important from an investor protection, it's important.
• 46:58
  SPEAKER_03: We have a we we get a lot of people who are you know interested in in the things that we're working on and the results of what we do for our work and even expanding times the scope of what we do.
• 47:06
  SPEAKER_03: Um I'll just give a quick plug for uh you know assurance over AI, and some of that starts with governance and being ready for it, but um, you know, that's a space that we're we're looking at very closely as we think about the growth of the assurance in a test business.
• 47:19
  SPEAKER_03: So um there there's just a ton going on, but it's just a really fun time to be involved in all those things.
• 47:24
  SPEAKER_03: I might have missed something because I know there's tons of things that you're involved in that I probably didn't even even hit on, but uh so feel free.
• 47:30
  SPEAKER_03: But I but I but it's the that's those are some of the things that are top of mind for me at least.
• 47:35
  SPEAKER_02: Well, that's great.
• 47:35
  SPEAKER_02: Well, thank you so much, Brian, for joining me today.
• 47:38
  SPEAKER_02: This was a great conversation.
• 47:39
  SPEAKER_02: I think there's lots more to come in this environment.
• 47:41
  SPEAKER_02: We're seeing rapid change.
• 47:43
  SPEAKER_02: So maybe hopefully you'll join me in the spring or later this year, and we could have another great conversation about what's going on in the regulatory environment.
• 47:50
  SPEAKER_03: I love it.
• 47:51
  SPEAKER_03: And one last plug for anyone who does listen um and has listened to the end of this.
• 47:55
  SPEAKER_03: Uh again, be a be a participant, be a real participant in this because now more than ever, your voice probably will matter more than ever given all of the change that's coming and uh all the interest in having public input um while change is coming.
• 48:09
  SPEAKER_03: I have my views, you have yours, and a lot of people have their own views.
• 48:13
  SPEAKER_03: But what's important is that they all kind of get into the mix uh because that results in the best outcomes from a regulatory perspective, standard setting perspective, and ultimately for the profession.
• 48:21
  SPEAKER_03: So uh thanks, thanks so much for having me.
• 48:23
  SPEAKER_02: That's a great plug and a great reminder.
• 48:25
  SPEAKER_02: Thank you, Brian.
• 48:26
  SPEAKER_01: That's our show for today.
• 48:29
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• 48:49
  SPEAKER_01: From Thought Leadership at PwC, I'm Heather Horn.
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