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	ISSUE 1 \| JANUARY 2026


	At-A-Glance “The only thing constant is change.” The ancient Greek philosopher, Heraclitus, made that quote about twenty-five hundred years ago. The statement certainly still applies to the process of accounting and auditing in recent times. The AICPA and CPA.com, in a new report, delve into this reality, and how accounting firms have or will need to respond in order to retain relevancy going forward. This issue of the Audit & Accounting Alert details the findings. Also, our Worldwide Update covers news from organizations across the globe.


	Gerald Herter - Editor


	Audit Transformation Survey Changes in the audit profession


	Ten years ago, an article in the December 2015 Audit & Accounting Alert, The Path to Future Relevance for Accountants, highlighted the need for audit firms to embrace emerging trends, such as artificial intelligence, in order to continue providing value to clients: Since advanced artificial intelligence techniques, such as machine learning algorithms (MLA) and natural language processing (NLP), are moving automation to sophisticated levels not seen before, accountants need to “concentrate on areas which remain difficult to automate, such as where human judgement or a deep understanding of the business environment is required, or where tasks depend on the knowledge and application of highly complex rules” (Institute of Chartered Accountants in England and Wales). In addition to the current level of business familiarity, the new focus will require stronger technical and statistical skills, which in the past may have been delegated to technology experts. In turn, firms will need to respond by offering the resources and support for staff to attain the requisite skill levels. Now, the new Audit Transformation Report, 2025 CPA.com and AICPA Audit Benchmark Survey, describes the process and results based on input from a wide range of 54 American CPA firms. The report identifies five key themes: Technology for audit is evolving Efficiency is a key driver of audit transformation Firms are struggling to leverage new approaches to audit Metrics are evolving, but slowly Audit transformation can improve client and staff experience 1. Technology for audit is evolving When I began my audit career, big, noisy, 10-key adding machines were the workhorses saving the mind-numbing exercise of manually adding long rows of numbers, coupled with mainframe computers that filled a room and spit out massive reports. Now such power is easily held in one’s hand. The survey showed that almost forty per cent of firms have automated solutions for such tasks as workflow management, footing and proofing, and confirmations. 2. Efficiency is a key driver of audit transformation A constant challenge is to fulfil the audit objectives in the minimum amount of time required. Spending too much time causes budget overruns, while cutting corners risks missing significant issues. Finding the proper balance between risk and reward is crucial. Two-thirds of firms prioritize rolling the binders (audit files) forward, assigning the same staff from prior year for continuity, and using technology tools to replace traditional audit procedures. 3. Firms are struggling to leverage new approaches to audit For ongoing audits, a tendency especially with newer staff can be to apply the SALY principle, Same as Last Year. However, over seventy per cent of respondents noted that quality and risk mitigation were most impacted when a risk-based approach was the focus as opposed to routinely applying prior year procedures. 4. Metrics are evolving, but slowly Most firms track realization, billable hours, total hours, and utilization. Even with basic technology, these statistics are readily determined. But more successful firms also look at areas such as: Percent of engagements on value billing agreements Deliverable-based accountability Leverage Client readiness metrics Audit margin per engagement Such analysis provides a more thorough and nuanced assessment of performance. 5. Audit transformation can improve client and staff experience About two-thirds of respondents found that clients are most satisfied when the audits take the least amount and time and cause the least disruption, while over half mentioned that insights and deliverables beyond the audit were appreciated as well. While going through the audit transformation process, the following were the primary obstacles that get in the way: Staff are not trained in advanced approaches or methodologies Poor quality client data Lack of access to client information and systems Budget constraints Further details can be found at Audit Transformation Survey.


	Worldwide Update Periodic roundup of recent and upcoming actions and activities by auditing and accounting organizations throughout the world.


	International IASB – International Accounting Standards Board (www.ifrs.org) Targeted Amendments to Greenhouse Gas Emissions Disclosures - Amendments to IFRS S2, and Consequential Amendments to Align with Amendments to Greenhouse Gas Emissions Disclosures, issued December 11, 2025, “provide reliefs and clarifications to support companies in applying the Standard, while keeping investor information needs in focus and minimising disruption to jurisdictions that are in the process of adopting or otherwise using ISSB Standards.” Effective for reporting periods beginning on or after 1 January 2027, with early application permitted. Translation to a Hyperinflationary Presentation Currency (Amendments to IAS 21), issued November 13, 2025, “clarify how companies should translate financial statements from a non-hyperinflationary currency into a hyperinflationary one.” Effective for reporting periods beginning on or after 1 January 2027, with early application permitted. Disclosures about Uncertainties in the Financial Statements—Illustrative examples, issued November 28, 2025, “demonstrating how companies can apply IFRS Accounting Standards when reporting the effects of uncertainties in their financial statements.” IFAC – International Federation of Accountants (www.ifac.org) No new developments. IFR4NPO - International Financial Reporting for Non-Profit Organisations (www.ifr4npo.org) No new developments. IOSCO – International Organization of Securities Commissions (www.iosco.org) No new developments. ACCA – Association of Chartered Certified Accountants (www.accaglobal.com) Combatting fraud in a perfect storm, policy and insights report released on November 18, 2025, “provides lived experiences and perceptions of fraud to show how it has become industrialised, yet at the same time even more enabled by human actions, governance gaps and technological advancements that conventional controls fail to address…also provide new guidance on assessing what works and doesn’t – and crucially how to incorporate behavioural insights into effective risk governance.”


	Africa, Europe, India and the Middle East (AEIME) FRC – Financial Reporting Council of the UK (www.frc.org.uk) Thematic Review: Reporting by the UK’s smaller listed companies, issued November 19, 2025, includes “practical insights to help smaller listed companies improve the quality of their corporate reporting and make the most of their resources,” covering revenue recognition, cash flow statements, impairment of non-financial assets, and financial instruments. International Standard on Sustainability Assurance (UK) 5000 - General Requirements for Sustainability Assurance Engagements, issued November 12, 2025, “provides UK companies, investors and assurance providers with a consistent, internationally aligned assurance standards for voluntary use in sustainability assurance engagements.” Effective for reporting periods beginning on or after December 15, 2026. ICAEW - Institute of Chartered Accountants in England and Wales (https://www.icaew.com/) Legal privilege and its interaction with the audit - Tech release 0125 AAF, issued November 25, 2025, “provides practical guidance for auditors on handling legally privileged information during audits, including the impact of recent case law and the responsibilities of directors and auditors.” EC – European Commission (https://ec.europa.eu/) No new developments. EFRAG – European Financial Reporting Advisory Group (www.efrag.org) Connectivity of Financial and Sustainability Reporting, discussion paper released December 17, 2025, “highlights concepts, types, and mechanisms of the connectivity of reported information. It also highlights that connectivity can enhance reporting quality irrespective of the underlying reporting framework.” Comments are due by June 30, 2026.


	Americas, Asia, Australia and New Zealand (AAANZ) AICPA & CIMA – American Institute of Certified Public Accountants (www.aicpa.org) No new developments FASB – Financial Accounting Standards Board (www.fasb.org) ASU 2025-12 — Codification Improvements, issued December 17, 2025, “focused on updating the FASB Accounting Standards Codification® for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements.” Effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. ASU 2025-11 — Interim Reporting (Topic 270) Narrow-Scope Improvements, issued December 8, 2025, “to improve the guidance in Topic 270, Interim Reporting, by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods. The amendments add to Topic 270 a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.” Effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities and for interim reporting periods within annual reporting 2 periods beginning after December 15, 2028, for entities other than public business entities. Early adoption is permitted for all entities. ASU 2025-10 — Government Grants (Topic 832) Accounting for Government Grants Received by Business Entities, issued December 4, 2025, “provide recognition, measurement, and presentation guidance for government grants received by business entities. They apply to business entities (specifically, all entities except for not-for-profit entities and employee benefit plans) that receive a government grant.” For public business entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. For entities other than public business entities, the amendments are effective for annual reporting periods beginning after December 15, 2029, and interim reporting periods within those annual reporting periods. Early adoption is permitted. ASU 2025-09 — Derivatives and Hedging (Topic 815) Hedge Accounting Improvements, issued November 29, 2025, “enables entities to apply hedge accounting to a greater number of highly effective economic hedges in the following five areas: Similar Risk Assessment for Cash Flow Hedges…Hedging Forecasted Interest Payments on Choose-Your-Rate Debt Instruments…Cash Flow Hedges of Nonfinancial Forecasted Transactions…Net Written Options as Hedging Instruments…Foreign-Currency-Denominated Debt Instrument as Hedging Instrument and Hedged Item (Dual Hedge).” For public business entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. For entities other than public business entities, the amendments are effective for annual reporting periods beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted. ASU 2025-08 — Financial Instruments—Credit Losses (Topic 326) Purchased Loans, issued November 12, 20254, expands “the population of acquired financial assets accounted for using the gross-up approach. Acquired loans (excluding credit cards) are deemed purchased seasoned loans and accounted for using the gross-up approach upon acquisition if criteria established by the new guidance are met. This change aims to enhance comparability, consistency, and better reflect the economics of acquiring financial assets.” Effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. GASB – Governmental Accounting Standards Board (www.gasb.org) GASB Statement No. 105 - Subsequent Events, issued December 17, 2025, “intended to enhance consistency in the application of requirements for subsequent events." Effective for fiscal year beginning after June 15, 2026, and all reporting periods thereafter. Earlier application is encouraged. COSO - The Committee of Sponsoring Organizations of the Treadway Commission (www.coso.org) No new developments. PCAOB – Public Company Accounting Oversight Board (www.pcaob.org) No new developments SASB – Sustainability Accounting Standards Board (www.sasb.org) No new developments SEC – Securities and Exchange Commission (www.sec.gov) No new developments


	Additional A&A News IAASB Issues Narrow-Scope Amendments Related to IESBA’s Using the Work of Experts FASB to review cash-equivalent status of some crypto assets in 2026 What’s coming for sustainability compliance in 2026 The Dark Side of AI No Firm Can Ignore As Finance Duties Shift, CAOs Take On Strategic Role Key UK accounting changes taking effect in 2026 and why they matter


	Audit & Accounting Alert is a publication of Integra International intended to highlight emerging issues in the profession. The goal is to give Integra members an awareness of developments impacting the practice of Audit & Accounting enabling them to stay on the forefront of industry trends.This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. Editor Gerald E. Herter Email: [email protected] www.Integra-International.net © 2021 Integra International. All Rights Reserved. If you wish to stop receiving email from us, you can simply remove yourself by visiting http://members.integra-international.net/members/EmailOptPreferences.aspx?id=66979517&e=lois.pares@integra-international.net&h=d523ac69369762eb987573d57c33e956f959035d.