PCAOB staff report outlines 2025 inspection priorities with focus on driving improvement in audit quality

PCAOB inspectors outlined their priorities for 2025 inspections in a PCAOB staff report released Dec. 9. The report highlights risks and other considerations the staff believes auditors should consider when planning and performing their current and upcoming audits, as well as sectors and industries that PCAOB inspection staff will prioritize. The report also provides a set of suggested questions that audit committees may consider as they exercise their oversight role. 

As discussed in the report, PCAOB staff in 2025 will place continuing emphasis on selecting audits of public companies that: 

• Are in industries and sectors with specialized accounting and/or that may be negatively impacted by uncertainties and volatility in the economic and geopolitical environment, 

• Are in sectors where inspectors have previously found a higher number of deficiencies 

• May have a heightened going concern risk 

In 2025, the PCAOB’s selection process will prioritize the financial, real estate and information technology sectors. Inspectors will also focus on public companies impacted by supply chain challenges, public companies engaging in merger and acquisition activities or business combinations, broker-dealers that file compliance reports and other broker-dealers that provide customers with various investment opportunities, such as introducing brokers. 

PCAOB staff plans to continue performing inspections with a focus on areas that pose a heightened risk to audit quality. Areas of inspection emphasis for 2025 include: 

• Audit areas with prior execution challenges 

• Audit areas where new auditing standards are being applied 

• Critical audit matters 

• Audit areas with increased use of technology, including use of generative artificial intelligence, at public companies and broker-dealers 

• Crypto assets 

• Quality control (QC) procedures, including independence and client acceptance procedures for firms entering alternative practice structures 

• Culture at audit firms 

In the context of the PCAOB’s 2025 inspections, the report contains suggested questions for audit committee members to consider amongst themselves or in discussions with their independent auditors. These questions are designed principally to further two-way communication on topics such as internal control over financial reporting, materiality, auditor use of technology, audit evidence and turnover on the engagement team.