Enforcement activity against auditors fell sharply in 2025, marking a dramatic shift in the regulatory landscape as both the Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) underwent significant leadership changes and adopted new enforcement philosophies, according to a new report from The Brattle Group published on February 26, 2026.
The SEC and PCAOB together initiated just 39 enforcement actions against auditors in 2025, a 33% decrease from 58 actions in 2024, according to the annual analysis prepared by Alison Forman and Adam Karageorge. Total monetary sanctions plummeted 66% to $17.9 million, down from $52.2 million the previous year.
SEC Activity Hits Historic Low
The decline was particularly pronounced at the SEC, which brought only two enforcement actions against auditors in 2025—the lowest annual total in the report’s eight-year sample period, 2018-2025. Moreover, one of those two actions was initiated before former Chair Gary Gensler’s resignation on January 20, 2025.
The minimal enforcement activity reflects a year of significant transition.
Following President Donald Trump’s inauguration, the SEC operated under interim leadership until Paul Atkins, a former SEC commissioner known for his deregulatory views, was sworn in as chairman on April 21. Atkins did not appoint a new enforcement chief until September when Judge Margaret Ryan assumed the role.
Atkins has signaled a philosophical shift away from what critics called “rulemaking by enforcement” under Gensler’s tenure, emphasizing instead what he describes as a “return to Congress’ original intent, which is to police violations of … established obligations, particularly as they relate to fraud and manipulation.”
PCAOB Penalties Decline
While the PCAOB imposed the third-highest total penalties in its 21-year enforcement history at $17.7 million, activity dropped precipitously after Chair Erica Williams’ departure. An estimated 84% of PCAOB actions and 98% of penalties were brought before Atkins fired Williams, and she left on July 22.
The SEC oversees the audit regulatory board, and the commission announced four new board members on January 30, 2026. George Botic, who became the PCAOB’s acting chair after Williams’ departure, continued in that role until the new chair, Demetrios Logothetis, was sworn in on February 10, 2026.
The appointments followed months of uncertainty about the board’s future, including a failed congressional attempt to eliminate the PCAOB through budget reconciliation legislation. A 43-day federal government shutdown in the fall further delayed PCAOB board appointments and limited both regulators’ ability to move forward with enforcement and policy initiatives.
Moreover, the PCAOB’s 2026 budget reflects the new priorities, with a 15% reduction in funding for the enforcement division compared to 2025.
Penalties Declined Without ‘Mega Settlements’
The report attributes the decline in total penalties partly to the absence of “mega-settlements”—cases with fines of $10 million or more. While the PCAOB imposed $17.7 million in penalties, this amount was 51% below the record set in 2024 at $35.7 million.
The SEC imposed only $230,000 in monetary sanctions last year, down sharply from $16.5 million in 2024. This represents an 86% decline from the $1.7 million imposed in 2020, the next lowest year of penalties in the sample.
Notably absent from 2025 were the large-scale “sweeps” that characterized enforcement under Chair Williams, in which the PCAOB simultaneously investigated multiple firms for the same potential violations. For example, more than one-third of PCAOB actions during 2022-2024 resulted from sweeps, such as Form AP violations.
Quality Control Violations Became More Prominent
Quality control (QC) deficiencies featured more prominently in PCAOB enforcement. Nearly two-thirds of PCAOB actions in 2025 included QC allegations, compared with 39% during 2022–2024. The PCAOB also continued to cite auditing standards violations in 62% of its cases, with audit documentation and due professional care remaining among the most frequently cited areas.
Only 8% of PCAOB actions involved ethics or independence violations, representing a notable decline from recent years.
Regulators Shift Toward Targeted Enforcement
The report highlights a broader change in enforcement philosophy at both agencies. SEC Chairman Atkins has prioritized fraud, manipulation, and cases involving material investor harm rather than technical or lower-level violations. Judge Ryan, in her first speech on February 11, said that she is “far more concerned with the quality and impact of the enforcement actions that we bring than with chasing numbers.”
At the PCAOB, Acting Chair Botic identified “promoting transparency in the audit process,” instead of “enforcement,” as one of the board’s three primary investor protection pillars.
2026 Outlook
The Brattle Group expects SEC audit-related enforcement to increase modestly in 2026 as new leadership settles in, though activity is projected to remain below historical levels.
PCAOB enforcement is expected to decline more sharply. Based on pre-Williams patterns, annual enforcement actions could fall to levels typical of the 2018–2021 period, with penalties potentially declining by 85%.
Both regulators are expected to heighten scrutiny of non-U.S. auditors, particularly in jurisdictions identified as posing “unique investor risk,” such as China.
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