Cop chasing crook
iStockphoto/RUSSELLTATEdotCOM

Amid rising enforcement activity, U.S. audit regulators handed out record monetary sanctions last year, according to a new report from Cornerstone Research.

The U.S. Public Company Accounting Oversight Board (PCAOB) ordered US$35.7 million in monetary penalties in 2024, which represented a 78% jump year over year, the firm reported. 

The sharp rise in penalties came as the volume of enforcement activity, which reached its highest level since 2017, has trended higher.

In total, the agency carried out 51 enforcement actions during the year, including 40 cases that involved audit performance issues, the report said.

The number of cases against U.S. firms rose during the year, but the volume of enforcement involving foreign respondents was flat, it noted — Canadian firms were the PCAOB’s top non-U.S. target.

And, the report noted that non-U.S. firms accounted for about 80% of the total monetary penalties, US$28.6 million, it said.

The vast majority (80%) of the audit actions brought in 2024 involved allegations of audit standards violations, while 40% also included alleged breaches of ethics and independence standards.    

“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, co-author of the report and co-head of Cornerstone Research’s accounting practice, in a release. 

Despite the increase in enforcement activity last year, the trend may not continue in light of both a recent U.S. Supreme Court decision in mid-2024 — which ruled that certain regulatory enforcement actions must be adjudicated by a jury, rather than an administrative tribunal — and the changeover in the U.S. government, which is expected to be more business-friendly. 

The report noted that the volume of PCAOB enforcement activity was much lower in the first Trump administration (2017 to 2021) than under Biden (2021-2025), and that it only handed out US$10 million in total penalties under Trump, versus US$68 million during the Biden administration.

Additionally, the regulator brought different kinds of enforcement actions in Trump’s first term, the report noted.  

“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,” said Russell Molter, co-author of the report and principal at Cornerstone Research.