HR 4616
Trusted Foreign Auditing Act of 2025
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Bill overview
This bill amends the Sarbanes-Oxley Act to address potential risks associated with foreign audits. Specifically, it defines ‘compromised auditor’ as an office of a registered accounting firm controlled or influenced by a country identified as a national security threat. The bill also establishes a ‘covered country’ based on the Director of National Intelligence’s annual threat assessment and certain designated nations. It introduces a trading prohibition for covered issuers using compromised auditors headquartered in countries of concern.
Key provisions
- Defines ‘compromised auditor’ based on control and influence by designated countries.
- Establishes ‘covered country’ designation based on national security threat assessments.
- Creates a trading prohibition for covered issuers using compromised auditors.
- Modifies the Sarbanes-Oxley Act to incorporate these definitions and provisions.
- Requires the Board to consider specific circumstances before holding public hearings involving compromised auditors.
Who is affected
- Public accounting firms
- Publicly traded companies (covered issuers)
- The Securities and Exchange Commission
- The Department of Defense
- The Director of National Intelligence
Notable changes
- Introduces a new definition of ‘compromised auditor’ with specific criteria related to foreign control and influence.
- Expands the definition of ‘covered country’ to include nations identified as national security threats.
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119th CONGRESS — 1st Session
H. R. 4616
IN THE HOUSE OF REPRESENTATIVES
A BILL
To amend the Sarbanes-Oxley Act of 2002 to provide for disclosure regarding foreign jurisdictions that hinder inspections, and for other purposes.
This Act may be cited as the Trusted Foreign Auditing Act of 2025
.
Section 104(i) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214(i)) is amended—
in paragraph (1)—
by redesignating subparagraphs (A) and (B) as subparagraphs (C) and (D), respectively; and
by inserting before subparagraph (C), as so redesignated, the following:
the term compromised auditor means, with respect to a registered public accounting firm, an independent branch or office of that firm (or a subsidiary of such a branch or office) that—
is subject to the jurisdiction and laws of the government of a covered country;
is directly or indirectly controlled, directed, or materially influenced by a covered country;
has a manager or owner, or conducts any operation, that is subject to the direct influence of a covered country; or
has entered into any arrangement, agreement, or relationship with the government or political party of a covered country that could compromise the objectivity, integrity, or independence of the branch, office, or subsidiary in performing auditing or attestation services;
the term covered country means—
Annual Threat Assessment); or
in paragraph (2)(A)—
paragraph (1)(A)and inserting
paragraph (1)(C); and
is a compromised auditor thatbefore
the Board is unable; and
by adding at the end the following:
If a covered issuer that is headquartered in a country of concern retains a compromised auditor to prepare an audit report described in paragraph (2)(A) for the covered issuer, the trading prohibition described in paragraph (3) shall apply to the covered issuer.
Section 105(c) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(c)) is amended by striking paragraph (2) and inserting the following:
In this paragraph, the terms compromised auditor and covered issuer have the meanings given those terms in section 104(i)(1).
Hearings under this section shall not be public, unless—