Report: PCAOB ramped up enforcement activity in 2024

Total monetary penalties levied by the Public Company Accounting Oversight Board set a new record for the third consecutive year in 2024 as the number of enforcement actions reached levels not seen since 2017, according to a new report released on Feb. 26 by Cornerstone Research.  

But with Paul Atkins likely taking over as chairman of the SEC, which oversees the PCAOB, a softer regulatory touch with accounting firms and a slowdown in enforcement activity could be forthcoming. There’s a possibility that the PCAOB—which isn’t a federal agency but an independent entity—could be folded into the SEC or be eliminated entirely. 

According to the Cornerstone Research report, PCAOB Enforcement Activity—2024 Year in Review, the PCAOB finalized 160 total enforcement actions, including 124 actions involving the performance of an audit, during Biden’s time as president. During the first Trump administration, the PCAOB finalized 126 total enforcement actions and 101 auditing actions. Total monetary penalties imposed were nearly seven times higher during the Biden administration, reaching approximately $68 million compared to a little more than $10 million during the first Trump administration. 

“The type of respondents in enforcement actions shifted from a majority of individual respondents during the Trump administration to a near even split between individual and firm respondents during the Biden administration,” Russell Molter, a principal at Cornerstone Research and report co-author, said in a statement. “Additionally, the percentage of respondents fined in auditing actions climbed from a little over half (59%) to nearly all respondents (94%).” 

The PCAOB ratcheted up enforcement during Biden’s last year in the White House, as the audit regulator publicly disclosed 51 total enforcement actions, including 40 actions involving the performance of an audit, in 2024—up from 46 total enforcement actions in 2023 and 42 in 2022. 

Most of these enforcement actions came in the first half of 2024, with only 10 auditing actions finalized after the U.S. Supreme Court ruled against the use of administrative law judges in SEC v. Jarkesy.  

At $35.7 million, total monetary penalties in 2024 marked a 78% increase over 2023. Since its inception in 2004, PCAOB enforcement has resulted in $94 million in total monetary penalties, 38% of which were imposed in 2024. In the last 20 years, the PCAOB finalized 487 total actions involving 675 respondents, the majority of which (344) were individuals.  

“The PCAOB continued aggressive enforcement in 2024, finalizing 30 auditing actions in the first half of 2024, more than triple the number of actions finalized in the first half of 2023,” said Jean-Philippe Poissant, a report co-author and co-head of Cornerstone Research’s accounting practice. “In one in five auditing actions, the PCAOB alleged violations of not only auditing standards but quality control standards and ethics and independence, as well.” 

Other key findings: 

• The number of auditing actions involving U.S. respondents grew in 2024, but those involving non-U.S. respondents didn’t. 

• For the first year since 2021, there were auditing actions in 2024 that referred to a company’s disclosure of a material weakness in internal control. 

• In over half of the 2024 auditing actions (52%), the PCAOB alleged violations of quality control standards. 

• 11% of firm respondents in 2024 auditing actions were required to retain an independent consultant, down from 15% in 2023.