SEC Accounting and Auditing Enforcement Activity Fell Sharply in 2021

PCAOB enforcement levels remained low.

Los Angeles—In a year characterized by leadership transitions at the U.S. Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB), overall accounting and auditing enforcement activity decreased, according to a report released today by Cornerstone Research.

The report, Accounting and Auditing Enforcement Activity—2021 Review and Analysis, notes that the SEC and PCAOB publicly disclosed a total of 52 accounting and auditing enforcement actions and imposed more than $159 million of total monetary settlements in 2021. The SEC initiated nearly two-thirds of those actions and imposed almost all the monetary settlements, which were nearly 90% lower than the $1.4 billion in total settlements imposed in 2020.

While the overall decline in the level of enforcement activity in 2021 was not surprising, we did not expect to see such a sharp decline in settlements.

“While the overall decline in the level of enforcement activity in 2021 was not surprising, we did not expect to see such a sharp decline in settlements,” said Elaine Harwood, a report coauthor, senior vice president, and head of the firm’s accounting practice. “The median settlement by firms in SEC enforcement matters was only $200,000, which means that half of the accounting and auditing cases that settled last year were for that amount or less.”