SEC and PCAOB Enforcement Actions Plummet to Multi-Year Lows in 2025 Amid Leadership Transitions and Deregulation

A Significant Drop in Regulatory Scrutiny

The year 2025 marked a substantial downturn in accounting and auditing enforcement activities by both the U.S. Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB). According to reports from Cornerstone Research, the SEC initiated 68% fewer actions than in 2024, reaching its lowest level in nine years. Similarly, the PCAOB finalized 27% fewer actions, hitting its lowest count since 2021. This decline is largely attributed to leadership transitions at both agencies and a broader shift towards deregulation under the Trump administration.

Impact on SEC Enforcement and Monetary Penalties

The SEC's enforcement efforts saw a dramatic reduction, with only 10 accounting and auditing actions initiated in 2025, down from 31 the previous year. Monetary settlements also plummeted from $907 million in 2024 to a mere $31 million in 2025. Notably, almost all of these settlements were imposed during the final weeks of outgoing Chair Gary Gensler's tenure, with only four actions initiated after Paul Atkins assumed the chairmanship in April. This indicates a clear change in enforcement priorities and intensity following the leadership change.

PCAOB's Reduced Oversight and Penalties

The PCAOB also experienced a significant decrease in its enforcement activities, finalizing 37 actions in 2025 compared to 51 in 2024. Of these, 33 were auditing-related actions, an 18% decrease. Monetary penalties for auditing actions were halved, totaling $17.6 million, with over 98% of these penalties finalized before outgoing Chair Erica Williams stepped down in July 2025. This mirrors the SEC's trend, suggesting a systemic shift in regulatory oversight across key financial watchdogs. Internal auditors should consider how this reduced external pressure might influence corporate governance and compliance efforts.

Implications for Internal Audit Professionals

For internal audit and assurance professionals, these findings highlight a potentially evolving regulatory environment. While reduced enforcement might seem to lessen external pressure, it underscores the critical role of internal audit in maintaining strong financial reporting and auditing standards. Organizations must not interpret this as an opportunity to relax controls. Instead, internal audit functions should proactively reinforce their independent oversight, risk assessment, and compliance monitoring to ensure continued adherence to best practices and regulatory requirements, regardless of the external enforcement climate. This period of reduced external scrutiny places a greater onus on internal mechanisms to safeguard financial integrity.