SEC plans to scale back Sarbanes-Oxley auditor attestation for most public companies

September 28, 2026 at 09:00 AM2 min

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The US Securities and Exchange Commission plans to exempt most public companies from auditor attestation of internal controls, a key Sarbanes-Oxley requirement enacted after Enron's collapse. The proposal would spare companies with public float below $2 billion and all newly public companies for their first five years. The move comes as the US marks the 25th anniversary of Enron's bankruptcy.

Key Facts

The SEC proposal would exempt all companies with public float below $2 billion from auditor attestation of internal controls.
Newly public companies would be exempt from the attestation requirement for their first five years, regardless of size.
About 1,100 large-cap companies would remain subject to the requirement, representing 94% of US market value.
Sarbanes-Oxley was passed in 2002 after Enron's collapse, requiring management certification and auditor attestation of internal controls.
The number of US public companies restating financial results fell steadily after Sarbanes-Oxley and has stayed low, according to Ideagen Audit Analytics.

The Proposal

The SEC plans to scale back the auditor attestation requirement for internal controls under Sarbanes-Oxley. The proposal would exempt every company with a public float of less than $2 billion. All companies would be spared the requirement for their first five years after going public, even if they are SpaceX-sized behemoths. SEC Chair Paul Atkins says the goal is "making IPOs great again," arguing that attestation costs deter companies from going public.

Market Impact

About 1,100 large caps would remain subject to the attestation requirement, accounting for 94% of the market by value. The SEC says investors remain well protected because every company must still certify strong financial controls in filings to shareholders. The requirement was immediately controversial after Sarbanes-Oxley passed because it increased costs through additional billable hours. Congress has amended the law several times, reducing the share of US public companies subject to auditor attestation to about half today.

Effectiveness Record

Sarbanes-Oxley improved the quality of financial accounting, with restatements falling steadily after enactment and staying low, according to Ideagen Audit Analytics. The law was passed in 2002 after Enron collapsed in 2001 when it became clear the energy giant had obscured its finances with dodgy accounting practices. There are notable differences between companies subject to the audit requirement and those that are not, though the source does not quantify them.