As the Public Company Accounting Oversight Board considers modernizing its standard-setting and enforcement operations, the board should ensure its objectives are proportionate to the risks they address and guarantee that bank audits are not selected for inspection more frequently than audits for other business sectors, the American Bankers Association said this week.
The PCAOB recently requested public input on its proposed 2026-2030 goals and objectives. Among the six goals identified, the board is seeking to modernize its standard setting along with its inspections and registration programs. The board is also proposing to sharpen its enforcement focus on conduct harmful to investors
In a letter, ABA said it was supportive of the board’s objectives but had several recommendations about how the standard-setting body should go about implementing them. One recommendation was for the PCAOB to make proportionality, scalability and cost-benefit discipline explicit across objectives.
“Proportionality is particularly important for community banks because disproportionate audit and oversight expectations can increase costs, reduce auditor availability and divert limited resources from serving customers and local communities without commensurate investor-protection benefits,” ABA said.
ABA also encouraged PCAOB to evaluate whether bank audits are being selected for inspection at a disproportionate rate and to address “the circular pattern that can occur when inspection focus itself contributes to more findings, which then reinforces a perception of heightened risk.”
Finally, the PCAOB should provide practical implementation guidance, examples and transition communications before any new expectations harden through inspections. “Further, the PCAOB should coordinate with [Financial Accounting Standards Board], banking regulators, auditors and issuers on areas like CECL where audit, accounting and supervisory expectations overlap,” the association said.
