Day one of the AICPA & CIMA Conference on Current SEC and PCAOB Developments centered on navigating regulatory change, strengthening audit quality, adapting to accelerating AI adoption, and addressing emerging risks across capital markets. From evolving SEC priorities and independence considerations to new FASB standards and the growing complexity of financial reporting technology, the overarching message was clear: the profession must evolve boldly in a dynamic reporting environment but without losing sight of the fundamentals that underpin trust in the capital markets.

Opening Session — Profession Opportunities Update with Mark Koziel, AICPA & CIMA CEO

The Conference opened with remarks from AICPA & CIMA CEO Mark Koziel, who highlighted the profession’s urgent need to adapt to economic volatility, shifting regulatory expectations, and rapid advances in AI. Recent AICPA surveys show practitioners’ top concerns remain inflation, interest rates, hiring challenges, and tariff impacts, with nearly two-thirds of finance leaders reporting negative effects from current trade dynamics. Koziel emphasized the CPA’s role as a trusted adviser during this “action–reaction period,” urging firms to focus on controllable factors, transparent communication, and disciplined planning.

He also underscored several forces shaping the profession’s future:

• Technology & AI: 82% of executives expect AI to drive productivity and upskilling; adoption is accelerating across tax, audit, and advisory functions.
• Quality & Trust: Continued emphasis on audit quality, digital asset guidance, cybersecurity, and standards modernization.
• Workforce & Firm Transformation: Ongoing talent gaps, increased private equity interest, and the need for firms to modernize strategy, governance, and pricing models.

Keynote: Conversations with SEC Chairman Paul Atkins and Chief Accountant Kurt Hohl

Paul Atkins, SEC Chairman

Chairman Atkins emphasized a clear theme: the profession must “get back to basics” — integrity, logic, independence, and professional skepticism. He expressed concern that in recent years, some firms have prioritized commercial interests in ways that he believes risk subverting the foundations of financial materiality, U.S. GAAP, and SEC disclosure requirements. Mr. Atkins noted that certain firm comment letters advocating positions inconsistent with long-standing standards remain publicly posted, underscoring the SEC’s skepticism of industry lobbying on key regulatory matters.

He highlighted the SEC’s ambitious rulemaking agenda, with financial reporting proposals and disclosure reforms expected to span the entirety of next year. Mr. Atkins pointed to the long-term decline in publicly listed companies, now 40–50% fewer than 30 years ago, and identified three major barriers to public listings:

• Disclosure burden: Risk factor sections that once were 1–2 pages have ballooned into the largest part of the 10-K; if they exceed 15 pages, an executive summary is required, often leading to redundant disclosures.
• Litigation risk: A driver of companies remaining private; SEC staff will no longer reject bylaws involving mandatory arbitration or fee-shifting when permitted by state law.
• Governance pressures: Increasingly politicized shareholder activism has, in Mr. Atkins’ view, strained corporate governance systems and may require reform.

Looking ahead, Mr. Atkins described a regulatory approach aimed at clarity rather than enforcement-by-surprise. He previewed forthcoming work on digital assets, including an innovation exemption and clearer crypto “rules of the road,” and stressed closer collaboration with Congress and the CFTC to reduce market uncertainty.

Mr. Atkins also addressed PCAOB oversight, independence risks, and board transitions. While acknowledging potential efficiencies from private equity investment and firm consolidation, he warned that these developments heighten the importance of maintaining auditor independence. He reaffirmed the SEC’s authority over the PCAOB and noted ongoing changes to board composition following recent resignations.

He closed by underscoring the global importance of U.S. capital markets, which represent roughly half of worldwide market capitalization, and the essential role of a strong, principled auditing profession in maintaining that leadership. His message to practitioners: stay focused, avoid distractions, and remain anchored in the fundamentals of integrity and objective financial reporting.

Kurt Hohl, SEC Chief Accountant

Mr. Hohl’s discussion centered on how regulators are adjusting oversight in response to rapid change, especially around AI, digital assets, and evolving firm structures. He noted that issuers are already experimenting with AI to draft footnotes, calculate reserves, and automate elements of financial reporting, raising questions about how far automation could eventually extend and how regulators must adapt to keep pace. Mr. Hohl also discussed the rising use of alternative practice structures and private equity investment in firms, emphasizing the need to reassess auditor independence rules in a world where technology companies, investment structures, and audit practices are becoming more intertwined.

A significant portion of the discussion focused on the SEC’s close coordination with the FASB, including the timely resolution of crypto-related questions that do not fit neatly within existing GAAP. Mr. Hohl highlighted the importance of due process, cost-benefit analysis, and encouraging preparer participation early in the standard-setting cycle to avoid costly surprises later. International convergence remains a priority, with the SEC urging deeper collaboration between the FASB and IASB to reduce global complexity and investor confusion.

On the audit side, Mr. Hohl described a potential shift in the PCAOB inspection model toward evaluating firm-level quality management systems, aligned with new global standards like ISQM 1, rather than focusing primarily on individual engagement deficiencies. Additional priorities included improving the usefulness of inspection reports, modernizing outdated interim auditing standards, and exploring greater convergence with international auditing standards to reduce cost and complexity for multinational audits.

SEC OCA Current Projects

The OCA panel focused on how the profession must adapt as financial reporting grows more complex and technology accelerates change, and highlighted several emerging trends shaping financial reporting, audit quality, and standard-setting, emphasizing the importance of global alignment, thoughtful integration of AI and high-quality valuation practices into both financial reporting and audits.

To anchor these themes, the panel highlighted several areas where registrants and auditors should sharpen judgment and documentation:

• International Standard-Setting & Global Alignment: OCA reiterated its longstanding position that strong engagement between the FASB and IASB is essential to reduce unnecessary differences and improve the usefulness of financial reporting.
• Valuation and Private Credit: Fair value continues to be a pressure point, with the OCA reminding firms that Level 3 measurements must reflect market-participant assumptions and be properly calibrated to transaction price. Increasing private-credit activity only heightens the need for skilled valuation specialists and strong oversight.
• AI in Financial Reporting and Audits: As companies integrate AI into processes, regulators expect clear explainability, continuous monitoring of models, and governance structures that allow boards to understand associated risks. AI may also push fraud-risk assessments toward more continuous evaluation rather than annual exercises.
• Digital Asset Reporting: The OCA continues to see challenging fact patterns in this area, and the panel provided a few examples of certain fact patterns in recent consultation processes.
• Private Equity and Firm Structure: With more private equity entering the accounting profession, the OCA emphasized the need to maintain independence, ensure governance prioritizes audit quality, and strengthen independence-monitoring systems as firm structures evolve.

Overall, the message from the panel was clear: while innovation and market transformation continue at a rapid pace, the profession’s foundation (robust controls, disciplined valuation practices, independence, and high-quality audits) remains unchanged and essential to maintaining trust in financial reporting.

AI in Financial Reporting: Practical Applications and Control Considerations

The panel explored how AI is rapidly moving from experimentation to practical, day-to-day use across finance and audit functions, describing how organizations are using AI to streamline research, automate documentation, analyze contracts, enhance FP&A reporting, and perform full-population testing of transactions, often achieving significant efficiency gains. Much of the innovation is happening “bottom-up,” with employees testing and building tools that are later formalized into enterprise processes.

Despite the momentum, panelists emphasized that AI introduces new risks that existing control frameworks must adapt to. Key themes included:

• Data quality & structure: AI models are only as good as the inputs. Poor tagging or inconsistent metadata can amplify errors.
• Evolving controls: Organizations are layering new approaches such as human-in-the-loop review, known-output test datasets, multi-model validation, and anomaly detection analytics.
• Continuous monitoring: Unlike traditional systems, AI requires ongoing oversight to address model drift, bias, and changing data patterns.
• Governance & policies: Companies need clear guidelines around allowed use cases, documentation expectations, and centralized visibility into all AI tools in use.

Panelists also noted that while AI is accelerating the pace of close activities, AR/AP processing, and budgeting, human judgment remains essential, particularly in interpreting model outputs, designing controls, and assessing risk. The consensus: AI will reshape financial reporting, but strong governance, high-quality data, and transparent controls are critical for its safe and effective adoption.

FASB Update: 2025 and Beyond

The FASB provided a forward-looking update on its 2025 technical agenda, highlighting significant progress in completing existing projects and advancing new areas where practice questions have intensified. Board members emphasized that nearly all projects from the prior year’s agenda are now finalized or near completion, reflecting one of the most active standard-setting periods in recent years. The session also underscored the importance of stakeholder feedback, obtained through outreach and comment letters, which shaped decisions on disclosure, digital assets, financial instruments, and internal-use software.

Key Themes from the Update

Agenda consultation findings: Several potential topics surfaced, with stakeholders seeking both enhanced disclosures and relief from disclosure overload. The Board will continue evaluating these items throughout 2025 and will publish a public summary of decisions.

New emerging-issue projects:

• Digital assets and stablecoins, addressing classification and transfer issues that current guidance does not fully capture.
• Equity classification refinements, reflecting concerns about inconsistencies in distinguishing equity from liabilities.
• Influence of post-implementation reviews: post-implementation review work on leasing and CECL continues to inform refinements, most notably the expansion of the gross-up model for purchased seasoned loans.

Major Standards Finalized or Nearing Completion

• Internal-use software (ASC 350-40): The updated standard modernizes a framework that had become outdated as development practices evolved. It removes rigid, sequential development-phase rules and replaces them with a more flexible model tied to management’s commitment of funding and probability of completion. It also incorporates website development into the same guidance and introduces PP&E-style disclosures to improve transparency around capitalized software costs.
• Derivative scope refinements (Topic 815): Historically, many contracts were captured as derivatives despite not being designed or understood as such. The new amendments create a principles-based exception for contracts whose underlyings relate to a party’s own operations or activities. The guidance also clarifies how to treat non-cash, share-based consideration in customer contracts, which is an area where practice had begun to diverge with inconsistent interpretations.
• Environmental credit programs: With carbon and renewable-energy credit programs expanding rapidly, entities lacked consistent recognition and measurement guidance. The new model addresses that gap by clarifying when credits should be recognized, how they should be measured, and how obligations linked to environmental compliance should be accounted for. Disclosure requirements were streamlined following stakeholder pushback about cost and operability.
• Purchased seasoned loans (CECL): The amendments unify accounting for acquired loans by expanding the population subject to the “gross-up” approach and introducing seasoning criteria to help differentiate purchased assets from originations. This reduces complexity and addresses concerns that the previous model resulted in inconsistent outcomes for economically similar transactions.
• Government grants (Topic 832): For the first time, business entities will have authoritative GAAP guidance on accounting for government grants. The standard outlines recognition thresholds, clarifies when grants relate to income versus assets, and provides alternatives for presentation (such as deferred-income or cost-offset approaches). This fills a longstanding gap that previously required entities to analogize to IFRS or other non-authoritative sources.
• Hedge accounting improvements: These targeted amendments address challenges arising from LIBOR cessation, the operability of hedging nonfinancial forecasted transactions, and the accounting for hedges of “choose-your-rate” debt instruments. The updates retain the core hedge model but eliminate operational friction points that often led to restatements or missed-forecast penalties.
• CECL expedient for short-term receivables: Recognizing that CECL can impose unnecessary burden for short-term trade receivables where expected credit losses are minimal and forecasting adds little value, the Board introduced practical expedients. These give entities more flexibility, including allowing certain private companies and nonprofits to consider post-balance-sheet collections without a preferability analysis.

The Board conveyed that 2025 was and will be a year of implementation and refinement: finalizing the remaining projects, continuing to assess emerging issues, and modernizing guidance where complexity or diversity in practice persists. The tone was one of steady, deliberate progress, with an emphasis on transparency, operability, and better aligning GAAP with evolving economic activity.