5 imperatives for auditors from the PCAOB chair
January 12, 2026
“There is many a slip twixt the cup and the lip.”
At last month’s AICPA Conference on Current SEC and PCAOB Developments, George Botic continued his tradition of educating while entertaining fellow CPAs regarding the audit — this time in his role as acting chair of the PCAOB.
Botic quoted a proverb about the potential peril in the simple act of taking a sip of hot tea and applied it to the complicated act of getting an audit to the finish line.
“That narrow space between the cup and the lip,” Botic posited, “is where risks live and where vigilance matters.”
Botic then segued into spilling the tea on five imperatives for auditors in the new year:
1. Declaration of (accounting firm) independence
“Independence is the linchpin of credibility, and without credibility, the audit loses its meaning,” Botic said. “That is why independence must be embedded within the firm system of quality control built into the policies, processes, and culture that drive every audit.”
2. A firm grasp on operations
“The second imperative is to encourage auditors to focus on ensuring that each member of the engagement team, from the partner to the most junior staff, has an in-depth understanding of the company’s business, strategy, and operations,” he said. “This understanding is essential for the auditor to appropriately identify and to respond to risks in the audit.”
3. Healthy skepticism
“Third is encouraging each engagement team member to exercise professional skepticism with the widespread knowledge that the firm will support them,” he said. “Every team member should know if they raise a concern, the firm has an ‘I’ve got your back’ culture. This is how skepticism becomes embedded in the firm’s culture.”
4. Time isn’t always of the essence
“Four is reinforcing the need to have sufficient staff time scheduled to complete the audit, and that the engagement team knows they have support from firm leadership, that if more time is needed, even if it means a delay in formal sign-off in issuing the auditor’s report, they can take it,” he said. “Firm leadership must continually reinforce the signal that the integrity of the audit matters more than the deadline.”
5. Critical audit matters are, well, critical
Botic, using the acronym for critical audit matters, said: “Fifth and final is exploring the existence of any potential CAMs, which is not just disclosures. These CAMs are windows into the auditor’s most difficult judgments. CAMs show investors where the audit was most challenging, and they demonstrate the auditor’s willingness to shine a light on that complexity.”
Earlier in his address, Botic labeled CAMs and the adoption of Form AP as the third and final pillar of the PCAOB’s efforts to protect investors by promoting transparency in the audit process, along with the board’s inspection program and its long-standing efforts to adopt new and revised standards such as those related to quality control systems.
Botic also discussed two areas that he sees as hot topics for both opportunity and risk for the profession moving forward.
“Both AI and private-equity investments in accounting firms carry the potential to truly reshape the profession,” he said. “Yet these opportunities come with clear challenges to ensure that overreliance on AI and the pressures of private equity do not jeopardize audit quality.”
[Journal of Accountancy]
