Securities and Exchange Commission (SEC) Chair Paul Atkins and the commission’s Chief Accountant Kurt Hohl are said to have urged the Public Company Accounting Oversight Board (PCAOB) to postpone the implementation of its new quality control (QC) standard by at least one year, according to four sources with knowledge of the matter.
The new QC 1000, A Firm’s System of Quality Control—which was adopted by the PCAOB in May 2024 and approved by a divided SEC in September—imposes a combination of principles-based and prescriptive requirements to make sure that audit firms maintain a robust QC system to better protect investors.
QC is foundational to audit quality because it deals with a firm’s system of employee training and compliance with professional standards and its standards of quality. But because the PCAOB had continued to find deficiencies in audit engagements as well as problems in firms’ QC systems, the board said the standard needs to be improved.
Audit firms, however, have opposed some of the proposed and finalized revisions, citing high costs and what they consider questionable benefits. They also claimed that the PCAOB did not show sufficient justification for significant rule changes.
In contrast, investor advocates have supported the new QC standard, saying it will significantly improve upon the PCAOB’s interim standards, which the board adopted from the accounting profession when it was established two decades ago.
Before the Sarbanes-Oxley Act of 2002—which created the PCAOB in response to accounting scandals at companies like Enron and WorldCom—the AICPA wrote the rules even for public company audits. And the PCAOB has a single mission of protecting investors.
QC 1000 is set to take effect on December 15, 2025. And if the PCAOB decides to delay implementation, the effective date will likely be pushed back to December 15, 2026.
The SEC declined to comment. The PCAOB did not immediately respond to a request for comment.
Auditors Asked for Delay
The SEC’s push for delay is likely a response to the Center of Audit Quality’s (CAQ) request for the deferral. The CAQ, an affiliate of the AICPA representing accounting firms that audit public companies, sent a letter to Acting PCAOB Chair George Botic, copied to the SEC, on July 23, 2025.
As part of its oversight activities, the SEC appoints and removes the PCAOB’s five voting members as well as approves its yearly budget and changes to its standards and rules.
In its letter, the CAQ said that audit firms have been making investments to comply with multiple QC standards. The AICPA, which writes audit standards for private companies as well as the International Auditing Assurance Standards Board (IAASB) have revised their respective quality management standards.
“Despite these significant efforts, a number of our member firms remain concerned about their ability to confidently comply with QC 1000 by the effective date,” the CAQ wrote. “We also continue to see that certain concerns raised by firms and the CAQ during the standard-setting process have manifested as real implementation challenges for several of our member firms.”
Further, the CAQ said that QC 1000 is probably the most significant standard adopted by the PCAOB in its recent history. Yet it has shorter implementation period—15 months—compared to the AICPA’s 44 months and the IAASB’s 27 months.
The CAQ did not comment beyond what’s in the letter.
New Deregulatory Era
The push for deferral by the new leadership at the SEC is not surprising given the change in administration in January. Departing from the Biden administration’s aggressive regulatory agenda, agencies are now pursuing a lighter-touch regulatory approach under the second Trump administration.
The SEC has placed a greater emphasis on capital formation as opposed to investor protection. For example, the commission is not defending its Biden-era climate disclosure rule in court, opened up private funds to retail investors, and is looking to scale back executive compensation disclosure requirements, among several business-friendly initiatives.
As for the PCAOB, Atkins in July ousted Erica Williams as the board’s chair. It is widely expected that someone who shares the administration deregulatory philosophy will be picked later in the year.
It is unclear whether the current board members, except for Christina Ho who shares audit firm concerns about QC 1000, will support delaying the standard’s effective date. If it is delayed, it will represent a partial victory for the auditing profession, which did not experience many wins during the Biden administration.
“The question I would have is, if there is a deferral, is the purpose to give firms more time to comply or would it be a step toward some sort of changes to QC 1000?” former founding PCAOB member Daniel Goelzer said. “I have heard nothing about this, but it seems possible that Chair Atkins would want the new board to take a look at the standard and consider some of the objections and questions that have been raised, again particularly as to impact on smaller firms.”
No matter what happens, investor advocates do not want the standards to be weakened.
“Delay wouldn’t be our preference, but we would accept a deferral so long as the additional time is not a mechanism for a new board to reconsider the standard,” said Sandy Peters, senior head of global advocacy of the CFA Institute. Peters serves on the PCAOB’s advisory groups.
Some are skeptical, however, that granting a one year-delay is the ultimate objective.
If regulators do decide to push back the effective date, “it would set the stage for dumping the standard once new board is in place,” said Jack Ciesielski, founder of R.G. Associates, Inc. who served on a PCAOB advisory group.
Editor’s Note: This article was updated to include a quote from Daniel Goelzer.
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