/>iTwenty years after the Public Company Accounting Oversight Board (PCAOB) was established by the Sarbanes-Oxley Act, and under new leadership in 2022, the PCAOB increased its enforcement activity sharply.[i] The number of actions finalized in 2022 rose to the highest level since 2017, and total monetary penalties were the largest in PCAOB history.
The PCAOB publicly disclosed 29 disciplinary actions involving the performance of an audit and/or a firm’s system of quality control, up more than 60% from 2021. Monetary penalties totaled almost $10.5 million, a nearly tenfold increase over 2021.
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The PCAOB publicly disclosed 29 enforcement actions involving the performance of an audit and/or a firm’s system of quality control (“PCAOB actions”) in 2022 against 26 individuals and 17 firms. (page 9)
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Over 75% of the PCAOB actions involving firm respondents contained allegations related to the firm’s system of quality control, up from about two-thirds in 2020 and 2021. No actions disclosed in 2022 alleged auditor independence violations. (page 4)
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Nearly half of the 2022 actions were disclosed in the fourth quarter of the year, with 10 in December alone. (page 5)
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Over 80% of penalties ($8.8 million) were associated with actions that were disclosed in the fourth quarter of 2022, with 75% ($7.9 million) imposed in the 10 actions disclosed in December alone. (page 12)
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In 2022, there were more PCAOB actions involving
non-U.S. respondents than U.S. respondents. The percentage of PCAOB actions involving non-U.S. respondents in 2022 (52%) was double the 2017–2021 average (26%). (page 6) -
The number of unique actions was more than 40% higher than in 2021 and over 20% higher than the 2017–2021 average. (page 8)
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The PCAOB imposed record monetary penalties of nearly $10.5 million in 2022. Monetary penalties were imposed on all firm respondents and all but two individual respondents. (pages 10–11)
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Nearly 90% of total monetary penalties were imposed on non-U.S. respondents in 2022. (page 11)
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The PCAOB considered firm respondents’ extraordinary cooperation when imposing sanctions on four firms in 2022. (page 12)
[i] In her July 28, 2022, remarks on the 20th anniversary of the Sarbanes-Oxley Act and the establishment of the PCAOB, Chair Erica Williams stated that the PCAOB identified strengthening enforcement as one of three key areas where it plans to further its mission. See “PCAOB Chair Williams Remarks on 20th Anniversary of Sarbanes-Oxley Act and Establishment of the PCAOB,” PCAOB, July 28, 2022, https://pcaobus.org/news-events/speeches/speech-detail/pcaob-chair-williams-remarks-on-20th-anniversary-of-sarbanes-oxley-act-and-establishment-of-the-pcaob (“Today’s Board has identified three key areas where we plan to further the PCAOB’s investor-protection mission: 1. Modernizing our standards, 2. Enhancing our inspections, and 3. Strengthening our enforcement.”).
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