CHICAGO, Aug. 15,
2024 /PRNewswire/ -- According to a new report from
The Brattle Group, total Public Company Accounting Oversight Board
(PCAOB) and US Securities and Exchange Commission (SEC) enforcement
activity against auditors in the first half of 2024 is
significantly outpacing the number of enforcement actions brought
by the regulators in recent years. In fact, the PCAOB has already
brought more actions in the first six months of the year than it
did in each full year under its prior administration
(2018–2021).
The report, Enforcement Activity Involving Auditors – 2024
Mid-Year Update, highlights PCAOB and SEC enforcement
activity thus far in 2024. It follows the January 2024 release of 2023 Enforcement
Activity Involving Auditors, which analyzed overall PCAOB and
SEC enforcement activity during 2018–2023, including a comparison
of activity during the regulators' current and prior
administrations. The mid-year update finds that the heightened
trend of enforcement established in the past two years is
continuing in 2024 for the PCAOB, though SEC enforcement activity
has been off to a slower start.
"PCAOB enforcement in 2024 is off to its fastest start in the
agency's history, bringing 34 actions against 45 respondents and
imposing a record $35 million in
penalties by the end of June," said Brattle Principal Alison Forman, who authored the report with
Associate Adam Karageorge. "And the
SEC, despite settling only two actions in the first half of the
year, has already imposed higher penalties on auditors so far in
2024 than in all of 2023."
The new report also examines how five predictions made in the
January 2024 publication have fared
in the first half of the year. This includes:
- Prediction #1: Overall enforcement activity will remain
elevated.
- Prediction #2: Enforcement activity involving
PCAOB-registered firms in the People's
Republic of China and Hong
Kong will increase.
- Prediction #3: Heightened focus on "audit firm
culture" may drive increased enforcement pertaining to systems of
quality control, independence, and ethics.
- Prediction #4: PCAOB and SEC enforcement activity will
increasingly focus on critical audit matters (CAMs).
- Prediction #5: We may see more joint actions brought by
both the PCAOB and SEC.
Enforcement Activity Involving Auditors – 2024 Mid-Year
Update also includes a discussion of how developments in
the first half of 2024 – including the Supreme Court's decision in
SEC v. Jarkesy and amendments to PCAOB Rule 3502 governing
contributory liability – could profoundly impact enforcement
activity against auditors moving forward.
The full report can be found on Brattle's website:
https://www.brattle.com/insights-events/publications/enforcement-activity-involving-auditors-2024-mid-year-update/.
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SOURCE The Brattle Group