PCAOB Staff Say Audit Committee Chairs Are Increasingly Seeking Insights From Their Auditors on AI's Potential Impacts on Financial Reporting

The Public Company Accounting Oversight Board, the PCAOB, oversees "registered public accounting firms that audit public companies and SEC-registered broker-dealers." Each year its Division of Registration and Inspections invites audit committee chairs at US public companies to share their perspectives on overseeing the auditors' work. In 2025 the staff "gathered insights from more than 250 audit committee chairs," and in April 2026 it published what it heard as a Spotlight.

It says it "represents the views of PCAOB staff" and "is not a rule, policy, or statement of the Board." Parts of it follow, not the whole.

The Committee and the Auditor

Under the Securities Exchange Act of 1934, as amended by the Sarbanes-Oxley Act of 2002, the independent audit committee is "directly responsible for the oversight of the company's independent auditor, including selecting the auditor, setting the auditor's compensation, and overseeing the auditor's work."

Asked about their relationships with audit firms, the chairs generally described them positively. They also voiced "an expectation of continual improvement, including the use of technology when conducting audits, clearer communication of emerging issues, and more proactive billing updates when services overrun established budgets and increases in fees occur."

AI in the Conversations

Among the top technology risks discussed with auditors, the staff write, "While audit committee chairs acknowledged the potential of AI to improve efficiency and audit quality, they are increasingly seeking insights from their auditors on the potential impacts of AI on the company's financial reporting and controls in place to gauge risk." And "Several audit committee chairs also raised questions about how AI implementation by audit firms would impact fees."

The chairs' discussions with audit firms, the staff report, included the auditor's use of "data analytics, proprietary audit platforms, and AI tools," specifically how firms use them to support audit work, such as testing and reviewing journal entries and research, and "how they ensure the appropriate design and consistent operation of the associated controls."

In the context of fraud concerns, cyber threats were frequently mentioned, and chairs "also expressed concerns about potential risks involved, specifically around integrity of information and staff preparedness to detect fraud that might be facilitated with the use of artificial intelligence (AI)."

The Spotlight records what the chairs asked and discussed. It does not say how the audit firms answered the chairs' questions on AI.

The chairs' questions run both ways: what AI does to the company's own reporting, and what the auditor's AI does to the audit.

When an audit firm says its AI tools are controlled, what would an audit committee need to see to judge that the controls are designed well and operate consistently?