SEC, PCAOB audit enforcement hits multiyear lows during leadership shakeups

Accounting and auditing enforcement activity declined sharply in 2025 at both the Securities and Exchange Commission and the Public Company Accounting Oversight Board, with actions and penalties dropping to multiyear lows during a period of leadership turnover at the two regulators.

The findings come from two reports from Cornerstone Research which track enforcement trends involving audit firms, accountants and related professionals. The reports show that both agencies pursued fewer cases and imposed significantly lower monetary penalties compared with 2024, reflecting a slowdown that coincided with transitions in agency leadership.

SEC cases fall to lowest level in nine years

The SEC initiated just 10 accounting and auditing enforcement actions in 2025, a steep drop from the 31 actions filed in 2024 and the lowest annual total in nine years. Financial sanctions associated with those cases also declined sharply. Monetary settlements reached $31 million for the year, down from $907 million in 2024.

Nearly all of the 2025 settlement dollars were imposed late in the tenure of former SEC chair Gary Gensler. According to the report, 98% of the $31 million in settlements occurred during his final three weeks in office, but after Paul Atkins became chair in April, enforcement slowed further, with only four of the 10 accounting and auditing cases initiated after his appointment.

“Although enforcement activity often declines during administrative transitions, 2025 activity was significantly lower than in the first years of the prior two SEC chairs,” said Jean-Philippe Poissant, a report coauthor and cohead of Cornerstone Research’s accounting practice.

PCAOB enforcement also declines

The PCAOB reported a similar decrease in activity.

The board finalized 37 enforcement actions in 2025, compared with 51 in 2024, marking the lowest total since 2021. Most of those cases (33) involved issues related to how audits were performed, classified in the report as “Auditing Actions.” That figure represented an 18% decline from the previous year.

Monetary penalties tied to those auditing cases totaled $17.6 million, a 50% decrease from 2024.

Accounting firms accounted for more than two thirds of respondents in 2025 auditing cases, up from roughly half the year before.

As with the SEC, the majority of penalties were imposed before a leadership transition. More than 98% of the $17.6 million in monetary penalties were finalized before former PCAOB chair Erica Williams stepped down on July 22, 2025.

“Consistent with SEC trends, PCAOB enforcement activity declined under the new chair,” said Russell Molter, a principal at Cornerstone Research and report coauthor.

Molter also highlighted the scale of penalties imposed during Williams’ tenure.

“Interestingly, penalties imposed under Chair Williams accounted for 75% of all monetary penalties imposed by the PCAOB throughout its 23-year history.”

The reports suggest the declines at both regulators reflect the enforcement slowdown that can accompany changes in agency leadership, though the magnitude of the drop in 2025 was notable compared with recent years.