At the Public Company Accounting Oversight Board’s open meeting last week, board members said outreach to all stakeholders over the past year indicated that transformational change was needed, but they also affirmed that their 5-year strategic plan is still relevant and their 2020 budget supports their continued commitment to making the necessary changes.

Each of the board members shared their views that much progress had been made on their strategic plan during 2019 but that more needs to be done for the PCAOB to advance its mission. Both the 2020 budget and 5-year plan were approved at the Nov. 19 meeting. The board also thanked former member Kathleen Hamm for her service and welcomed new member Rebekah Goshorn Jurata.

Despite the board’s mandate to hold an open meeting every calendar quarter, last week’s meeting was the PCAOB’s first since December 2018.

The board’s efforts throughout 2019 focused on executing its strategies in five core areas:

1. Changes to the inspections program

The board’s vision is to promote and improve audit quality. Its oversight of audit quality continues through inspections and enforcement actions to deter and remediate audit failures, and there have been significant changes in the inspections process to increase the emphasis on audit firms’ quality control processes. The board has also accelerated the inspection process to make it more timely and is creating a new team of experienced inspectors to continue to address inspection quality.

The PCAOB is sharing more information about audit quality. In 2019, for the first time, it contacted each audit committee chair of companies whose audits were inspected that year, as compared with approximately 10 percent in the past. The agency has also begun to report on successful audit practices it observed during inspections, not only on deficiencies. In addition, it will announce a revised inspection report intended to provide more relevant and readable information to readers about inspection results next year.

2. Stakeholder outreach and communications

The board has made efforts to improve its transparency and accessibility and has significantly increased its proactive outreach to investors, audit committees, preparers, and other audit regulators. It wants to engage in ongoing two-way exchanges of information and views, including hosting roundtables for the first time for investors and audit committees. As such, it hired a new stakeholder liaison, Erin Dwyer, to create a new stakeholder engagement strategy.

Its 2019 communications efforts included more external publications. The board has issued guidance to raise awareness and help with implementation of auditing standards (not just through inspections or enforcement), including last year’s revised standards on auditing estimates and using the work of specialists. It supported the new critical audit matters implementation by preparing user guides, offering Webcasts, and holding frequent meetings with firms.

3. Reorganization of functions

To be more effective in using existing resources and information, the PCAOB has integrated its research and analysis function into oversight activities. It is also working on reorganizing its Office of Economic and Risk Analysis into oversight and has developed metrics to measure performance toward its strategic plan.

4. Changes to PCAOB resources

Along with reorganizing, the board created new officers of risk, information, security, and compliance. As technologies that affect auditing and financial reporting continue to change, the agency is increasing its focus on innovation and new risks, including cyber-security. Its 2020 budget includes significant investment in technology, and it has hired its first chief data officer, adopted its first enterprise risk management program, and developed new business continuity and information security plans and systems.

5. Human capital development

A recurring theme at the open meeting was the board’s appreciation of and commitment to its staff and its goals to further develop, empower, and reward them. The board created its first human capital strategic plan and a new learning management system for staff training and development. It is increasing and improving internal staff communications and expects to issue new compensation and career development plans.

The 2020 budget and strategic plan are available on the PCAOB’s Website. The PCAOB’s budget is subject to Securities and Exchange Commission approval, which is scheduled for review Dec. 18.