SEC Scrutinizes PCAOB’s Audit Inspections, September 2026: What Accounting Teams Must Do

Last Updated: September 20, 2026

What did the PCAOB just report about Big Four audit quality?

The PCAOB’s Big Four inspection reports, released August 13, 2026, showed a combined Part I.A deficiency rate of just 8% for 2025 audits, down sharply from 20% in 2024 and 26% in 2023.

Part I.A findings identify audits where the firm did not obtain sufficient appropriate evidence to support its opinion on a company’s financial statements or internal controls, according to Thomson Reuters Tax & Accounting. The 2026 reports covered the six largest U.S. audit firms: BDO USA, Deloitte & Touche, Ernst & Young, Grant Thornton, KPMG, and PricewaterhouseCoopers. By firm, Deloitte and EY each posted a 5% deficiency rate, with EY recording its best results since 2009, while PwC came in at 9% and KPMG at 13%, per Bloomberg Tax’s coverage of the release. On the surface, this looks like one of the strongest audit-quality years the profession has reported in over a decade.

Why is the SEC now examining the PCAOB’s inspection process itself?

The SEC’s Division of Examinations has an active, ongoing review of how the PCAOB runs its inspections, prompted by the length of time since the last such review and unresolved industry concerns about consistency.

According to a Government Accountability Office report published September 3, 2026, the SEC’s examination of the PCAOB began around September 2025 and was still ongoing as of the GAO’s review earlier this year. The GAO cited three stated reasons for the SEC’s scrutiny: the importance of inspections to overall audit-quality oversight, the fact that the commission had not formally examined the PCAOB’s inspection function since 2009, and persistent complaints from audit firms about inconsistency in how deficiency findings are reached across different inspection teams. The SEC’s Division of Examinations is specifically assessing whether the PCAOB’s internal procedures and organizational structure actually produce uniform, defensible inspection outcomes, rather than results that vary by inspector or by firm.

Why does the timing of the improved scores raise questions?

A September 9, 2026 Columbia Law School analysis argues the sudden improvement coincides with a period of deregulatory pressure on the PCAOB, making it unclear whether audit quality actually improved.

The CLS Blue Sky Blog post, titled “Are the Big Four Auditors’ PCAOB Inspection Results Too Good to Be True?”, lays out the backdrop directly: the SEC under the current administration replaced all but one of the PCAOB’s board members, cut the board’s budget, and forced a substantial reduction in PCAOB staff. The author’s point is not that the Big Four cheated, but that a regulator operating with fewer inspectors, fewer resources, and a newly installed board could plausibly produce softer findings even if underlying audit practice hadn’t changed much at all. That is a materially different explanation than “the profession got dramatically better in one year,” and accounting and audit-committee professionals have no easy way to distinguish between the two from the published numbers alone.

Why does this matter for accounting teams specifically?

Finance and accounting departments rely on PCAOB inspection data to vet auditors, brief audit committees, and benchmark internal control rigor, so any doubt about that data’s reliability flows directly into those decisions.

Public company accounting teams routinely reference PCAOB inspection history when their audit committee evaluates whether to retain the incumbent auditor, negotiates audit fees, or documents auditor-independence and quality assessments for the proxy statement. Private companies preparing for an IPO or a PE-backed audit also lean on these reports when selecting a Big Four or national firm. If the underlying inspection numbers are, as the CLS Blue Sky Blog and GAO materials suggest, potentially shaped by reduced regulatory capacity rather than purely by audit performance, then accounting teams that took the August 2026 reports at face value may be building 2026-2027 audit-committee reporting and auditor-transition decisions on a foundation the SEC itself is not yet confident in. That is a direct governance and disclosure risk, not just an academic debate about regulatory politics.

How does the new AICPA fraud standard fit into this picture?

Separately, the AICPA’s Auditing Standards Board approved Statement on Auditing Standards No. 151 on August 20, 2026, tightening auditor obligations around fraud risk assessment just as PCAOB oversight itself comes under scrutiny.

Journal of Accountancy and Accounting Today both reported that SAS No. 151 supersedes the long-standing SAS No. 122 (AU-C Section 240) and adds more specific requirements for professional skepticism, continuous fraud-risk assessment, documentation, and how auditors must respond once fraud is identified or suspected. The final standard is expected to post in October 2026 and takes effect for periods ending on or after December 15, 2028, with early adoption permitted. The two developments are connected in practice: at the same moment external audit oversight faces a credibility question, the standard auditors are held to for catching fraud is being made explicitly stricter. Accounting teams preparing financial statements should expect more probing fraud-related inquiries from their external auditors well before the 2028 effective date, since early adopters and cautious firms tend to phase in new requirements ahead of the deadline.

What should accounting teams do this week?

Accounting and controllership leaders should independently verify auditor quality rather than relying solely on published PCAOB scores, and should flag the open SEC-PCAOB review to their audit committee now.

• Brief the audit committee. Summarize both the August 13, 2026 inspection results and the ongoing SEC examination of the PCAOB’s inspection process, so the committee sees the full picture rather than only the favorable headline numbers.
• Diversify your quality signals. Layer PCAOB data with your own engagement-team turnover tracking, restatement history, and internal control deficiency trends rather than treating the deficiency rate as a single source of truth.
• Get ahead of SAS No. 151. Ask your engagement team how their fraud-risk assessment procedures, whistleblower-program review, and revenue-recognition testing will change, even though the formal effective date is more than two years out.
• Watch for the SEC’s findings. The Division of Examinations’ review of the PCAOB has no announced publication date; when it lands, it could directly affect how much weight your audit committee should place on future inspection reports.
• Document your own diligence. Keep a written record of why your organization selected or retained its auditor, independent of the PCAOB scores alone, in case those scores are later revised or recontextualized.

What role does accounting software and technology play here?

Modern audit and close software can help accounting teams build the independent quality and fraud-risk evidence trail that regulators and audit committees are now effectively asking for.

Continuous transaction monitoring, automated journal-entry testing, and audit-trail features built into current accounting software platforms give finance teams a way to demonstrate control rigor that does not depend on any single external inspection score. As fraud-detection expectations rise under SAS No. 151 and skepticism about audit-quality metrics grows, teams that can show their own systematic, technology-driven monitoring will be in a stronger position with both auditors and audit committees than teams relying purely on manual, sample-based reviews.

Frequently Asked Questions

What is the PCAOB’s Part I.A deficiency rate?

It is the share of inspected audits where the PCAOB found the firm lacked sufficient evidence to support its opinion on the financial statements or internal controls, as defined in the board’s inspection reports.

Is the SEC investigating the Big Four for wrongdoing?

No. The SEC’s Division of Examinations is reviewing the PCAOB’s own inspection procedures and organizational structure, not accusing any of the Big Four firms of misconduct, according to the GAO’s September 3, 2026 report.

When does the new AICPA fraud standard, SAS No. 151, take effect?

SAS No. 151 was approved August 20, 2026, will be published in October 2026, and becomes effective for audits of periods ending on or after December 15, 2028, though firms may adopt it early.

Should our company change auditors because of these developments?

Not automatically. These developments are a reason to document independent due diligence and ask pointed questions of your current auditor, not necessarily a reason to switch firms without further evidence.

Bottom Line

The Big Four’s improved 2025 PCAOB inspection scores are real numbers, but their meaning is now genuinely contested at the regulatory level, with the SEC examining the PCAOB’s own inspection process and independent commentators questioning whether reduced regulatory capacity, not better audit work, explains the gains. Layer that uncertainty with a materially stricter incoming fraud standard in SAS No. 151, and accounting teams have a clear mandate this quarter: brief the audit committee honestly on both stories, build independent evidence of auditor and internal-control quality, and get ahead of the fraud-risk procedures auditors will increasingly expect well before the 2028 deadline.