Trusted Foreign Auditing Act of 2025
Trusted Foreign Auditing Act of 2025 (S. 2382) would amend the Sarbanes-Oxley Act of 2002 to tighten scrutiny of auditors and foreign jurisdictions that interfere with audit inspections. The bill creates new definitions for “compromised auditor” and “covered country,” tying them to foreign influence or government involvement, and to national security threat designations. It would extend consequences to issuers connected to covered countries that rely on compromised auditors, including a trading prohibition for such issuers. The act also changes the rules governing public hearings under Sarbanes-Oxley to keep most hearings private unless a compromised auditor is a party or good cause is shown with consent. The sponsor in the Senate is listed as Sen. Scott of Florida, and the bill has been referred to the Committee on Banking, Housing, and Urban Affairs. In short, the bill aims to (1) flag and restrict audits with foreign influence, (2) penalize issuers that rely on compromised auditors, and (3) limit public exposure of certain audit-related hearings when foreign interference could be involved.
Key Points
- 1New definitions and scope
- 2- Compromised auditor: An independent branch or office of a registered public accounting firm that is subject to, controlled by, or influenced by a covered country, or has relationships that could compromise audit objectivity or independence due to foreign government or political party involvement.
- 3- Covered country: Any country identified as a threat to U.S. national security in the most recent U.S. Director of National Intelligence Annual Threat Assessment, or any “covered nation” defined in 10 U.S.C. 4872(f)(2).
- 4Disclosure and oversight changes
- 5- The act adds requirements related to disclosure about foreign jurisdictions that hinder inspections, using the above definitions to identify where risks may lie.
- 6Trading prohibition for affected issuers
- 7- If a covered issuer headquartered in a covered country retains a compromised auditor to prepare an audit report, a trading prohibition applicable to that issuer would take effect.
- 8Public hearing changes
- 9- Hearings under SOX may be private unless a compromised auditor retained by a covered issuer is a party to the hearing, or the Board orders otherwise for good cause with consent of the parties.
- 10Coverage and referral
- 11- The changes affect registered public accounting firms, their foreign branches, and issuers with ties to covered countries or compromised auditors.