SEC and PCAOB enforcement fall sharply

Enforcement activity against accounting and auditing firms declined sharply last year under the second Trump administration, according to two new reports.

The reports, released Wednesday by Cornerstone Research, found the SEC brought 68% fewer accounting and auditing actions than in 2024, while the PCAOB finalized 27% fewer actions over the same period.

The declines occurred during a year marked by leadership transitions at both the SEC and the PCAOB, with SEC chairman Paul Atkins taking over from Gary Gensler at the PCAOB, and Atkins asking former PCAOB chair Erica Williams to step down. The Cornerstone Research reports echoes similar findings in a report released last week by the Brattle Group.

Cornerstone's new SEC report found the SEC initiated only 10 accounting and auditing enforcement actions in 2025, down from 31 in 2024 and its lowest level in nine years. Monetary settlements fell sharply to $31 million, down from $907 million in 2024. Nearly all (98%) of the $31 million of 2025 settlements was imposed during Gensler's final three weeks in office.

Only four of the 10 actions last year were initiated after Atkins became SEC chair in April.

"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, in a statement.

Cornerstone's PCAOB report found the board finalized 37 enforcement actions in 2025, down from 51 in 2024 and its lowest number since 2021. Of those actions, 33 involved the performance of an audit, an 18% decrease in auditing actions from the previous year. Monetary penalties for auditing actions by the PCAOB totaled $17.6 million, a 50% decline from 2024. Firms comprised over two-thirds of total respondents in auditing actions in 2025, up from approximately one-half in 2024. Of the $17.6 million in total monetary penalties imposed in 2025, over 98% were finalized before 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, in a statement. "Interestingly, penalties imposed under Chair Williams accounted for 75% of all monetary penalties imposed by the PCAOB throughout its 23-year history."

In 2025, 59% of PCAOB auditing actions involving non-U.S. respondents alleged violations of quality control standards only, according to the report, compared to 6% of those involving U.S. respondents. Monetary penalties imposed in 2025 auditing actions totaled $17.6 million, which was a 50% decrease compared to 2024, but above the five-year average from 2020 to 2024.