What’s driving the precipitous drops in enforcement activity at the SEC and PCAOB?

We’re in the market for some synonyms for precipitous, because how many precipitous drops can you really have? Should we call it a steep decline? A really, really big dip?

In any case, the SEC and PCAOB majorly pulled back on enforcement activity in 2025. You know what? Fine, it was a precipitous drop.

SEC enforcement actions pertaining to accounting and auditing reached their lowest level in nine years in 2025, according to new analysis from Cornerstone Research. The agency initiated just 10 actions, marking a 68% year over year decrease compared with 2024, the report said.

Meanwhile, over at the PCAOB, a similar picture emerged: The organization finalized the lowest number of enforcement actions (37) since 2021, a decline from 51 actions in 2024, per Cornerstone.

Some of this is normal-ish—enforcement actions often drop amid administration changes—but the gravity of both declines is notable.

New guard. At least part of the story here can be chalked up to timing.

At the SEC, only four of the initiated actions occurred after Chair Paul Atkins’s April 2025 swearing-in, the Cornerstone report noted. That’s both expected and unexpected, according to its co-authors.

“As we’ve seen in the past from our data, there’s always some expected drop when there’s a transition to a new administration, because there’s [a] change in leadership, change in priorities,” JP Poissant, a report co-author and co-head of Cornerstone’s accounting practice, told CFO Brew. “But I think this year the impact of the transition was much bigger than the past, or at least the recent past.”

The drop after the administration change in 2025 was “markedly below the numbers of actions initiated during the prior two chairs’ first years,” per Cornerstone. “For comparison, 17 Actions were initiated in 2017 after Jay Clayton was sworn in on May 4, 2017, and 30 Actions were initiated in 2021 after Chair Gensler assumed the role on April 17, 2021.”

Poissant also cited “other factors” likely driving the decline, like the SEC’s workforce reduction and the long-lasting government shutdown.

At the PCAOB, enforcement activity followed a similar before-and-after trend: Over 98% of monetary penalties were finalized before outgoing Chair Erica Williams stepped down in July 2025, Cornerstone said.

“Similarly, with the change in administration, you see the change in leadership, and often we’re going to find quite a drop,” Russell Molter, a principal at Cornerstone and report co-author, told us. “This one was precipitous.” (Sorry, no synonyms here.)

“The hard-charging approach that we were seeing before under Chair Williams came to almost an abrupt halt, obviously resulting in a lot less activity in the second half of the year,” he continued.

Money talks. Perhaps in part because of the decline in activity, the size of monetary settlements and penalties dropped at both the PCAOB and SEC.

At the PCAOB, monetary penalties for auditing actions amounted to $17.6 million, marking a 50% decline from 2024.

For the SEC, monetary settlements fell to $31 million, an actually precipitous drop from $907 million in 2024. Nearly all (98%) of the 2025 settlements were “imposed during the three-week period between January 1, 2025, and Gary Gensler’s resignation as SEC Chair on January 20, 2025.”

“In the past, most of the penalties are often driven by a few very large cases,” Poissant said, regarding the SEC. “[In 2025] you didn’t have these big cases, so all the cases that settled were fairly small. Again, that may be just timing.”

“It’s always possible that one large case comes back in the future,” he added. “If you look at early 2026, already there’s been one accounting case settlement that is $40 million, so it’s already more than the entire 2025.”

Free for all? No matter how significant the enforcement declines were in 2025, that doesn’t mean CFOs should expect a lack of enforcement activity to continue.

And as other securities experts have warned: SEC chair tenures are short; statutes of limitations are long.

“Accounting fraud is something that the current SEC says that they’re still focused on,” Poissant said.

The same general message holds true at the PCAOB, Molter noted. “These [PCAOB] rules and regulations, if you will, have not changed,” he said. “Folks are going to be held accountable for following those rules,” though penalty amounts and how aggressive enforcement will be are “unclear,” he noted.

“It’s not like you should take your foot off the gas in improving the quality of your processes and following the rules,” he continued. “That’s where you see litigation down the road.”