Accounting firms in the US expect a less stringent inspection approach from regulators, as the Securities and Exchange Commission (SEC) plans to reduce the number of individual audits it scrutinizes. Instead, the SEC intends to place greater emphasis on evaluating the internal quality control systems of accounting firms. This shift is seen by firms as an opportunity to lobby for changes to an inspection regime they currently view as excessively concentrated on minor audit deficiencies.
The Public Company Accounting Oversight Board (PCAOB), which is supervised by the SEC, annually inspects numerous audits conducted by large firms. For instance, last year, the PCAOB examined 63 or 64 audits at the Big Four firms, an increase from 53 or 54 two years prior. The PCAOB has historically used the deficiency rate from these inspections as a measure of audit quality. However, audit firms have privately asserted that a previous rise in this rate, particularly after the COVID-19 pandemic, was partly due to inspectors identifying minor errors that would not have previously resulted in sanctions.
Kurt Hohl, the SEC chief accountant, voiced in December 2025 that reforming the inspection process was "overdue," especially given the evolving standards for firms' quality control systems. Christina Ho, a PCAOB board member who has often sided with accounting firms in recent policy discussions, anticipates that the new SEC strategy will lead to a reduction in the total number of audit inspections. This change comes two decades after the PCAOB's establishment in the wake of the Enron scandal, with the original mandate from Congress not specifying a minimum number of audits for inspection.
