All four Big Four accounting firms have urged the US Securities and Exchange Commission (SEC) to approve amendments to the Public Company Accounting Oversight Board’s (PCAOB) new quality-control standard, arguing that the changes would reduce unnecessary compliance costs without compromising investor protection.
In separate submissions to the SEC dated between 2 and 9 October, Deloitte, EY, KPMG and PwC endorsed revisions to QC 1000, the standard governing how audit firms design, operate and monitor their internal quality-control systems.
The PCAOB adopted the amendments on 9 September 2026, ahead of the standard’s scheduled implementation on 15 December. The revisions require SEC approval before taking effect.
What is changing?
The amendments go beyond administrative simplification. Among other changes, they would:
Remove the External Quality Control Function requirement, which would have required larger audit firms to appoint an external individual to evaluate significant judgements made in assessing and reporting on the effectiveness of their quality-control systems.
Narrow requirements to investigate similar deficiencies across other audits, limiting the specific cross-engagement review obligation to deficiencies that resulted, or could result, in insufficient audit evidence or an inappropriate overall engagement conclusion.
Reduce documentation retention requirements for quality-control systems from seven years to five.
Change how deficiencies are assessed, allowing firms to consider other controls designed to address the same quality risk when determining whether a quality-control deficiency exists.
Revise the framework for evaluating quality-control effectiveness, including allowing a firm to conclude that its system is effective despite certain unremediated deficiencies.
The PCAOB says the revisions will bring its requirements more closely into line with other quality-management standards while reducing compliance costs.
The Big Four support the changes
In its submission to the SEC, Deloitte argued that the amendments would reduce unnecessary costs and operational complexity while preserving the standard’s core framework.
“We believe the Amendments reduce unnecessary cost and operational complexity without compromising the rigor of firms’ systems of quality control.”
Deloitte
EY argued that the revisions would improve consistency with international standards and eliminate additional costs that would outweigh their benefits.
“We believe the final standard benefits from greater consistency with ISQM 1, reduces incremental costs that would outweigh the benefits and focuses on the matters most important to advancing audit quality.”
EY
KPMG said the changes would reduce complexity and operational burdens while maintaining the standard’s investor-protection objectives.
“The amendments reduce complexity, ease operational burdens, and improve alignment with other quality management standards”
KPMG
PwC similarly supported approval, arguing that the revisions would improve the standard’s focus and scalability without diminishing investor protection.
“In our view, these changes do not diminish investor protection.”
PwC
Investor groups disagree
Not everyone agrees that the amendments preserve the necessary safeguards.
In its submission to the SEC, CFA Institute opposed approval of the revisions, raising concerns about the removal of independent quality-control oversight, reduced requirements for identifying recurring audit deficiencies and changes to the assessment of control failures.
“We do not believe the SEC should approve the PCAOB’s revisions to QC 1000.”
CFA Institute
The Council of Institutional Investors also challenged the removal of the External Quality Control Function, arguing that the PCAOB should at least retain the requirement for firms auditing more than 500 public-company issuers.
“We find both reasons less than compelling.”
Council of Institutional Investors
According to PCAOB data cited by the Council, the five audit firms meeting the 500-issuer threshold audited 6,962 public companies in 2025, accounting for approximately 60% of all issuer audits and 81.8% of aggregate issuer market capitalisation.
The disagreement raises a fundamental question: whether systems designed and evaluated by audit firms themselves provide sufficient assurance without a mandatory independent challenge mechanism.
A wider shift in US audit oversight
The debate comes amid a broader transformation of US audit regulation.
As previously reported by Big4News, the PCAOB is moving towards an inspection approach that places greater emphasis on firms’ quality-control systems, while its enforcement priorities are also changing.
In a recent Big4News interview, former SEC enforcement lawyer Andrew Feller warned that changes to the division of responsibilities between the SEC and PCAOB could leave gaps in the investigation of audit misconduct.
The latest revisions therefore raise questions extending beyond compliance costs. As regulators increasingly focus on firms’ internal quality-control systems, the effectiveness of the safeguards governing those systems becomes more consequential.
The SEC’s decision will determine whether the amended requirements take effect alongside QC 1000 on 15 December 2026.
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About the author: Claudine Cassar is the founder and editor of Big4News, covering audit, consulting, regulation and governance across Deloitte, PwC, EY and KPMG.