HR 4616119th CongressIn Committee

Trusted Foreign Auditing Act of 2025

Introduced: Jul 22, 2025

Sponsor: Rep. Stefanik, Elise M. [R-NY-21] (R-New York)

Economy & TaxesFinancial Services

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Trusted Foreign Auditing Act of 2025 is a bill that would amend the Sarbanes-Oxley Act of 2002 to address foreign influence over audit work. It creates a new concept of a “compromised auditor” tied to foreign jurisdictions deemed a threat to U.S. national security, and it imposes consequences for covered issuers that retain such auditors to prepare audit reports. The bill also narrows public hearing requirements under SOX, making hearings less likely to be open to the public unless specific conditions apply. The overall aim is to strengthen U.S. oversight and integrity of audits when foreign influence might hinder inspections. Key elements include defining what constitutes a compromised auditor and a covered country, linking the use of compromised auditors to a potential trading prohibition for affected issuers, and adjusting public hearing rules to restrict disclosure unless certain parties are involved or good cause is shown. The short title of the measure is the “Trusted Foreign Auditing Act of 2025.”

Key Points

1Defines “compromised auditor” as an independent branch or office of a registered public accounting firm (or its subsidiary) that is governed, influenced, or controlled by a covered country, or has arrangements with that country’s government or political party that could undermine auditor independence.
2Defines “covered country” as (a) any country identified as a threat to U.S. national security in the latest Annual Threat Assessment from the Director of National Intelligence, or (b) a country designated as a covered nation under U.S. law (10 U.S.C. 4872(d)(2)).
3Adds a “trading prohibition”: if a covered issuer headquartered in a country of concern uses a compromised auditor to prepare an audit report, the issuer faces a trading prohibition.
4Public hearings provisions: hearings under SOX section 105(c) would not be public unless a compromised auditor is a party to the hearing or good cause is shown with consent of the involved parties.
5Short title: The act is titled the “Trusted Foreign Auditing Act of 2025.”

Impact Areas

Primary group/area affected: Registered public accounting firms with foreign affiliates (particularly those in covered countries), and covered issuers (public companies) that may be headquartered in or connected to these countries. Investors in those issuers could be affected by changes in audit oversight and potential trading restrictions.Secondary group/area affected: U.S. securities regulators and auditors (e.g., the SEC, PCAOB) responsible for enforcing SOX and implementing the new definitions and prohibitions, as well as the U.S. national security and intelligence communities that determine which countries are “covered.”Additional impacts: Potential changes in cross-border auditing practices, increased compliance and monitoring costs for issuers and audit firms, and changes to the transparency of hearings related to compromised auditors (less public visibility unless specific conditions apply). The bill could also raise questions about how “covered country” status is determined and applied, and what due process protections exist for affected firms.

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