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It’s been a busy year for regulators, with the SEC and the PCAOB enacting significant changes and pressing the gas on enforcement efforts. From ESG to tax to fraud, regulators are reshaping the regulatory environment.
To jog your memory, here’s a look back at some of the biggest regulatory changes in 2023.
Putting it on the expense account. In July, the Financial Accounting Standards Board (FASB) passed a new standard requiring that US public companies publicly account for large expenses by business division on both a quarterly and annual basis.
Climate rules. The SEC didn’t release its long-awaited climate rule this year, but it’s been a busy year in ESG regs nonetheless. The Corporate Sustainability Reporting Directive (CSRD) standard went into effect in the EU on January 1, and some US companies doing business in the EU were required to comply. In June, the International Sustainability Standards Board (ISSB) released the IFRS S1 and IFRS S2 standards, which will go into effect for annual reporting periods starting on or after January 1.
Tax break. Large multinational companies got a break this year as in June, the Organization for Economic Cooperation and Development’s global minimum tax was put off until 2026. The tax was originally set to kick in in 2025.
Into the breach. The big news in regulation this year was the SEC’s new cybersecurity disclosure requirements, effective December 15, and require public companies to report cyber breaches within four business days. The rules also require companies to annually disclose their cybersecurity risk management policies.
Busted. Regulators also had a busy enforcement year in 2023. PCAOB board chair Erica Y. Williams threw down the gauntlet in late 2022, vowing to use “every tool in [the agency’s] enforcement toolbox” in 2023. Fair to say, it delivered: In June, it levied the largest fine ever on a non-affiliate firm when it dinged Marcum LLP $3 million for SPAC audit violations. Between July 28 and August 8, the PCAOB sanctioned 13 accounting firms for a variety of violations. In late November, the PCAOB issued stiff fines against PwC firms in China and Hong Kong over cheating on mandatory testing.
The SEC had a busy year too, filing 784 enforcement actions as of mid-November and imposing $4.9 billion in financial remedies throughout the year, according to a SEC press release. In January, the agency barred former McDonald’s CEO Stephen Easterbrook from serving as an officer in a public company for five years for lying about “improper relationships” with employees. The SEC also levied charges against four electric vehicle companies for “making materially misleading statements regarding revenue projections, sales, or product launches.” The SEC was particularly aggressive in pursuing crypto this year, filing charges against multiple crypto companies.