With Donald J. Trump set to return to the presidency in January 2025, the regulatory landscape for audit firms may be significantly reshaped. Trump’s administration is expected to follow through on its deregulatory agenda, impacting the SEC, PCAOB, and the broader audit industry. Here are five key points for CPA firms to consider as this new chapter unfolds.
1. Trump’s 2020 Proposal to Merge the PCAOB and SEC
Back in 2020, as part of his broader deregulation push, Trump proposed merging the PCAOB into the SEC. This move was designed to streamline financial oversight by reducing the perceived redundancy between the two agencies. While the proposal faced opposition and was stalled in Congress, it laid the groundwork for future changes. Under a second Trump term, we could see renewed efforts to consolidate these regulatory bodies, potentially reducing oversight complexity and cutting compliance costs for audit firms.
2. The Leadership Shift: Biden to Trump
The transition from Trump to Biden in 2021 brought significant leadership changes at both the SEC and PCAOB. Under Biden, a shift toward stricter enforcement and more regulatory transparency occurred, particularly with the PCAOB. However, as Trump prepares to return to office in 2025, these changes may be reversed. New appointments at the SEC and PCAOB are possible, with a strong focus on deregulation and reducing the compliance demands and enforcement actions that audit firms have faced in recent years.
3. Trump’s Calls to Fire SEC Chair Gensler
One of Trump’s early actions in his second term is likely to be the removal of SEC Chair Gary Gensler. Trump has been critical of Gensler’s aggressive regulatory stance and may replace him with a more industry-friendly figure. This leadership change at the SEC could trigger a domino effect, influencing appointments and policies at the PCAOB. With the SEC holding the power to appoint and remove PCAOB board members, a shift in SEC leadership could reshape the direction of audit oversight, potentially loosening the regulatory grip on the industry.
4. Deregulatory Agenda: Lessening Compliance Burdens
Trump’s deregulatory stance could have a direct impact on audit firms, with a focus on reducing compliance costs. A new SEC leadership under Trump may lead to a shift in priorities for the PCAOB, with a potential reduction in stringent audit inspections and enforcement measures. Audit firms could benefit from a regulatory environment more conducive to growth, with fewer burdensome requirements. This aligns with Trump’s broader philosophy of promoting business-friendly policies, which could result in a more relaxed oversight regime for the audit industry.
5. PCAOB QC 1000: Staying on Track Despite Shifting Leadership
Despite the anticipated regulatory shifts, the PCAOB’s implementation of Quality Control Standard (QC) 1000 is expected to remain on track. The deadline for full implementation is December 15, 2025, and the PCAOB has shown its commitment to enforcing these standards. While leadership changes may affect the enforcement intensity, the core requirement of QC 1000 — ensuring robust quality control within audit firms — will likely still apply. CPA firms must remain proactive in adapting to these standards, as any delay in preparation could risk non-compliance.
Conclusion
As Trump returns to the presidency in 2025, audit firms should anticipate a changing regulatory landscape. While deregulatory shifts may ease compliance burdens in some areas, the implementation of new quality control standards like PCAOB QC 1000 remains non-negotiable. The time for CPA firms to act is now — waiting for possible regulatory changes could mean losing valuable time to prepare for the future of audit oversight. By staying ahead of these shifts, firms can ensure they’re well-positioned for whatever comes next in the evolving regulatory environment.
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