The US Securities and Exchange Commission has proposed raising the public float threshold for mandatory internal control audits under Section 404(b) of the Sarbanes-Oxley Act. The limit would increase from $700 million to $2 billion. This change would exempt approximately 1,700 public companies from the requirement to have independent auditors verify their internal financial reporting processes.
If implemented, the proposal is expected to reduce annual revenue for US accounting firms by an estimated $430 million. These firms, including the Big Four—EY, Deloitte, PwC, and KPMG—collectively received $3.8 billion in total audit fees from the affected companies in the previous year. The Big Four, alongside the Center for Audit Quality, have expressed opposition to the plan.
Proponents of the measure argue that the current attestation requirement acts as a financial barrier for mid-sized companies seeking to list on US exchanges. They maintain that standard financial statement audits would remain in place. The initiative is part of a broader deregulatory agenda led by SEC Chair Paul Atkins to lower compliance burdens for public companies.
