A new staff report from the Public Companies Accounting Oversight Board (PCAOB) lists the body’s top priorities for inspections.

The 2023 inspection plan considers overall business risks that were present in 2022, including:

● Disruptions in supply chains;
● Volatility in financial and commodity markets due to such factors as inflation, interest rates and currency fluctuations;
● The trend of deal cancellations and redemptions related to special purpose acquisition (SPAC) companies;
● Mergers and acquisitions (M&A) activities, including de-SPAC transactions; and
● The ongoing impact of the remote/hybrid work environment.

"Increased deficiencies in 2021 inspections and increased comment forms in 2022 inspections revealed a troubling trend in audit quality, which we are tackling head-on in 2023," PCAOB Chair Erica Williams said in a statement. "By staying ahead of new and emerging risks, our inspections plan will hold firms accountable and drive improvements in audit quality for investors."

The list of 2023 inspection priorities outlined in the report includes:

● Risk of fraud;
● Auditing and accounting risks;
● Risk assessment and internal controls;
● Financial services-specific considerations;
● Broker-dealer-specific considerations;
● M&A, including de-SPAC transactions;
● Digital assets;
● Use of the work of other auditors;
● Quality control (particularly talent retention and its impact on audit quality, and independence); and
● Other areas of inspection (critical audit matters, cybersecurity, and use of data and technology in the audit).

"Global financial conditions, fiscal and monetary tightening, and economic uncertainties have increased existing financial reporting and audit risks that public companies, broker-dealers and their auditors needed to consider," the report said. "These conditions have heightened the need for auditors to exercise professional skepticism in identifying and assessing risks of material misstatement and to plan and perform audit procedures in response to their assessments of the risks of material misstatement and fraud in the financial statements."