The Big Four accounting firms have urged the Securities and Exchange Commission to approve rule revisions by the Public Company Accounting Oversight Board that would soften quality control standards for audits.
In comment letters filed at the SEC this month, KPMG, PwC, Deloitte, and EY said the PCAOB amendments to “QC 1000, A Firm’s System of Quality Control” ease compliance burdens without undermining safeguards for investors.
Big Four firms support PCAOB revisions
“The amendments reduce complexity, ease operational burdens, and improve alignment with other quality management standards, while preserving the standard’s rigor and the Board’s investor protection objectives,” KPMG said in an Oct. 9 letter to the SEC.
The PCAOB changes, adopted by the board last month and scheduled to take effect on Dec. 15, would drop the requirement that firms create a so-called External QC Function if they published more than 100 audits during the previous calendar year.
The revisions would also eliminate the “design only” rule, which requires an accounting firm to create a quality control framework even if it does not audit publicly traded companies.
Investor groups oppose softened standards
Investor groups have filed comments opposing the diluted standards. The CFA Institute, for example, deems upholding the requirement for external quality control assessments a “very high” priority.
The External QC Function is seen as a critical safeguard for investors, according to Sandra Peters, the institute’s senior head of corporate disclosure and information advocacy.
The Council of Institutional Investors has also expressed concerns, suggesting that the PCAOB should have retained the EQCF requirement for firms auditing more than 500 public companies.
Unlike the Big Four, these groups argue that the proposed changes may weaken investor protections, despite claims that they address implementation challenges and reduce unnecessary costs.
SEC Chair Atkins favors easing compliance
Atkins has proposed raising thresholds for “large accelerated filers” and softening shareholder proxy rules, indicating a broader trend toward reducing regulatory requirements for companies.
“In our view, these changes do not diminish investor protection,” PwC said in an Oct. 7 letter, emphasizing that the revisions enhance focus and scalability by addressing unintended consequences.
SEC Chair Atkins’ Regulatory Approach
Since becoming SEC chair in April 2025, Paul Atkins has focused on reducing compliance burdens for public companies. He has proposed raising thresholds for “large accelerated filers” and softening shareholder proxy rules. Atkins also seeks to reduce non-financial disclosure requirements.
