Proposed SEC Rule Change Could Exempt Thousands of Companies from Auditor Attestation Requirements
The Securities and Exchange Commission (SEC) has proposed exempting more U.S.-listed companies from obtaining an auditor’s opinion on their internal financial controls, a requirement established after the Enron scandal. If approved, this change would remove these requirements for approximately 1,700 public companies with market floats below $2 billion and new listings in their first five years. The move is part of SEC Chair Paul Atkins' deregulatory agenda aimed at reducing costs and complexity to encourage more IPOs. The proposed rule could cost accounting firms over $400 million annually by eliminating a significant source of fees tied to auditor attestation requirements under the Sarbanes-Oxley Act. Major accounting firms, including EY, Deloitte, PwC, and KPMG, along with investor groups have opposed the change, urging further evaluation. The U.S. Government Accountability Office found that crossing the current threshold increased audit fees by 13% at median companies, suggesting a meaningful financial impact on accounting firms.
