Trump’s regulatory rollback risks $430M in US audit fees as SEC proposes gutting post-Enron rules

The SEC just proposed tripling the threshold that determines which public companies need independent audits of their internal financial controls. If finalized, the change would exempt around 1,700 companies from one of the most consequential investor protections to emerge from the Enron era, and it would vaporize an estimated $430 million in annual revenue for US accounting firms. SEC Chair Paul Atkins wants to raise the public float exemption for Section 404(b) auditor attestation from $700 million to $2 billion. That section of the Sarbanes-Oxley Act, passed in 2002 after Enron and WorldCom turned corporate accounting into a spectator sport, requires outside auditors to independently verify that a company’s internal controls over financial reporting actually work. The money at stake The companies that would fall under the new exemption collectively paid $3.8 billion in total audit fees in the prior year. The $430 million slice specifically tied to 404(b) attestation work represents a meaningful revenue stream for audit firms, particularly the Big Four: EY, Deloitte, PwC, and KPMG. All four have pushed back against the proposal, joined by the Center for Audit Quality and multiple ...