After a leadership change in early 2022, the Public Company Accounting Oversight Board (PCAOB) has been much more active in many areas of its oversight functions such as enforcement and standard-setting in order to better protect investors compared to previous board leaderships.
The board also stepped up in its effort to provide individual audit inspection results more quickly last year, according to the board’s 2022 Annual Report, published on April 5, 2023. This has been a frequent complaint of investor advocates who said that it takes the PCAOB too much time to issue inspection reports following audit inspections.
To get the reports published more quickly, the board said that it first had to clear a backlog of reports from previous years, according to the report, which listed key achievements of 2022. And last year, the board approved more than 280 inspection reports, which represented a 73 percent increase over 2021. This is also the most reports the board has approved in a single year.
“Thanks to that work, we ended 2022 positioned to continue speeding up the release of inspection reports and achieve our goal of increased transparency,” the PCAOB stated in the annual report.
Inspection was not the only area that the current board broke a record.
The PCAOB also had a record year in terms of enforcement activities.
The audit regulatory board issued 42 enforcement orders in 2022, which is double the number of orders in 2021.
Of the 42 orders, 23 were against firms or individuals located abroad, according to the annual report. The board last year imposed a total fine of $11 million, which was the highest-ever in its history.
In terms of fines levied on accounting firms, the report said that the PCAOB more than doubled the total dollar amount as compared to any year in the previous five years.
The board also levied a fine on 100 percent of firms sanctioned in 2022. By contrast, that figure was 86 percent from 2017 to 2021.
In terms of penalties on individuals, the board more than quadrupled the total dollar amount as compared to any year in the previous five years.
The PCAOB imposed penalties on over 90 percent of individuals sanctioned in 2022, or 24 of 26 individuals. From 2017 to 201, it was only 50 percent.
This article originally appeared in the April 14, 2023 edition of Accounting & Compliance Alert, available on Checkpoint.
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