Former President Donald Trump's push to end mandatory quarterly financial reporting for public companies and to relax internal controls auditing requirements could significantly impact the Big Four accounting firms: Deloitte, EY, KPMG, and PwC. This proposed change, which Trump first suggested in 2018 and has renewed calls for, would allow companies to report earnings semi-annually instead of quarterly, aligning the U.S. with practices in the U.K. and parts of the EU. The SEC is reportedly prioritizing this proposal.

Accounting firms estimate that eliminating quarterly reports could lead to a 15% reduction in their audit fees. Given that preparing a Form 10-Q typically costs between $50,000 for small companies and over $1 million for large-cap enterprises, and takes around 180 hours, the move to semi-annual reporting could halve these costs for companies. However, this translates to a potential loss of up to $400 million in annual audit fees for the Big Four, severely impacting their business model.

Beyond quarterly reporting, the SEC is also considering exempting most companies from independent audits of their internal financial processes, a requirement instituted by the Sarbanes-Oxley Act after scandals like Enron and WorldCom. While companies would still need audits of their financial statements, 80% would no longer require external verification of their internal controls. This rollback could lead to decreased financial transparency, increased market volatility, and a higher risk of fraud, according to critics like the CFA Institute and Americans for Financial Reform.

In response to these potential revenue losses, accounting firms might need to consider cost-cutting measures, including fewer new hires and increased reliance on artificial intelligence. PwC, for instance, has already announced plans to reduce college campus hires by one-third by 2028, with a 39% reduction specifically in audit roles, partly due to AI advancements. This regulatory shift could exacerbate job market challenges for entry-level accountants. The Business Roundtable supports the SEC's proposals, citing reduced compliance costs, while a significant majority of public comments submitted to the SEC have opposed the move to semi-annual reporting.