In a new report, Cornerstone Research said Public Company Accounting Oversight Board (PCAOB) enforcement activities were higher during the Biden administration than the first Trump administration.
In the first year of PCAOB enforcement during the Trump administration, which was the last year for Chair James Doty, the number of total finalized actions hit a record with 54 actions. Monetary fines totaled $4.9 million in 2017, the highest for a single year during, according to the report published on February 26, 2025.
Trump’s SEC Chair Jay Clayton subsequently replaced all board members, including Doty, and named William Duhnke to head up the PCAOB from 2018. And from then on until the end of President Trump’s first term, enforcement activity declined, reaching a low of 17 total actions in 2020 with total fines of about $1.5 million.
When Gary Gensler became SEC chair and named Erica Williams to head up the PCAOB beginning in January 2022, the trend reversed as both the commission and the audit regulatory board ramped up enforcement actions as well as regulations. The SEC oversees the PCAOB.
Audit Work Related Actions
The report provides stats for total number of actions as well as actions for the performance of audit. For example, audit firms could violate other rules, such as firm reporting.
For audit work violations, a notable trend is increased enforcement actions against auditors located overseas, which was more than double, during the Biden era. And Cornerstone attributed this in part to the historic agreement to inspect and investigate firms based in China in 2022.
The research also found that the type of defendants shifted from a majority of individuals during the first Trump era to an almost even split between individuals and firms during the Biden presidency.
The percentage of respondents fined increased from 59% to nearly all respondents. The median monetary penalty during the Biden administration was four times that during the Trump administration.
Overall, there were 126 total actions during the first Trump administration compared to 160 during Biden years. The number of actions on audit work was 101 during Trump and 124 during Biden.
The total monetary penalty was $10.6 million during the first Trump era and $67.8 million during Biden.
The median penalty for auditing actions against individuals was $5,000 during Trump and $35,000 during Biden. As for fines against firms, the median penalty was $15,000 during Trump and $40,000 during Biden.
The report’s tally is from January 20, 2021, to December 31, 2024, for Biden. And for the first Trump administration, it is from January 20, 2017, to January 19, 2020.
A footnote of the report said the PCAOB finalized two actions from January 1 to January 19, 2025.
The report looked at 20 years of PCAOB enforcement results from 2005 through 2024 and found that the board had 487 completed enforcement actions involving 675 respondents. The majority of those were individuals at 344.
In the first 10 years of PCAOB enforcement, there were only 72 actions related to the performance of the audit involving 53 audit firms and 73 individuals. Moreover, the board did not impose monetary penalties in three of the first 10 years. And total monetary fines in auditing actions were about $5 million from 2005 to 2014.
But starting from 2015, there was a significant increase in PCAOB enforcement. Between 2015 and 2024, the PCAOB finalized 302 auditing actions involving 210 firms and 256 individuals. It reached its highest levels in 2016 and 2017 when Doty was chair, plummeting to much lower levels until 2021 but remained below its previous highs.
2024 Enforcement Actions
In the meantime, the PCAOB notched 51 enforcements in 2024, which is the highest since 2017. Actions on audit performance reached 40, an 8% increase from 2023.
Total fines since the PCAOB was established two decades is $94 million, and 38% of that, or $35.7 million, were imposed last year alone. This is a new record for three consecutive years under Williams’ leadership.
One enforcement action in particular bumped up the total amount in 2024 when the board in April fined KPMG Netherlands a record $25 million for cheating on mandatory internal training exams.
The $35.7 million total monetary penalties in 2024 is a 78% increase over 2023 figures.
“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,” Jean-Philippe Poissant, a coauthor of the report and cohead of Cornerstone Research’s accounting practice, said in a statement. “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.”
This article originally appeared in the February 27, 2025, edition of Accounting & Compliance Alert, available on Checkpoint.
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