S. 2382 — Trusted Foreign Auditing Act of 2025

This section amends PCAOB (Public Company Accounting Oversight Board) inspection authority over registered public accounting firms under Sarbanes-Oxley Act Section 104(i) (15 U.S.C. 7214(i)) by (1) adding definitions in paragraph (1) of "compromised auditor" (i.e., an independent branch or office of a firm subject to the jurisdiction, control, influence, or arrangements with a covered country's government that could compromise audit independence) and "covered country" (i.e., a country identified as a U.S. national security threat in the Annual Threat Assessment or defined as a covered nation in 10 U.S.C. 4872(f)(2)); (2) updating paragraph (2)(A) to reference the redesignated subparagraph and to specify that designation applies if the firm is a compromised auditor that the Board is unable to inspect; and (3) adding paragraph (5) to apply the trading prohibition in paragraph (3) to any covered issuer headquartered in a covered country that retains a compromised auditor to prepare an audit report described in paragraph (2)(A). (Thus, issuers using auditors compromised by adversarial foreign governments face U.S. securities trading bans.)

This section revises PCAOB rules on public hearings in investigations and disciplinary proceedings of registered public accounting firms and associated persons by making such hearings nonpublic by default, unless (1) a compromised auditor (as defined in section 104(i)(1)) retained by a covered issuer (as defined therein) is a party or (2) the Board orders otherwise for good cause shown with the consent of the parties. (Thus, most PCAOB hearings—conducted by the Public Company Accounting Oversight Board to enforce audit standards for public company audits—will be private.)