The PCAOB: Quality Audits Protect People
This series of short videos provides highlights from the PCAOB’s mission-driven efforts to protect investors in 2022.
The PCAOB has three important tools to keep investors protected: enforcement, inspections, and standards. Our Board is currently working to strengthen, enhance, and modernize those tools. In 2022, we made significant progress, including updating standards to meet today’s challenges and record-setting enforcement penalties to deter bad actors.
Strengthening Our Enforcement
In 2022, we imposed the highest total penalties in PCAOB history. We more than quadrupled the total dollar amount of penalties imposed against individuals who break the rules compared to the last five years. We achieved many enforcement firsts, including the highest penalty imposed in a settlement against an individual.
To protect investors, the PCAOB is working to strengthen our enforcement. We are using every tool in our enforcement toolbox to ensure there are consequences for putting investors at risk and that bad actors are removed.
Enhancing Our Inspections
Our inspections team is constantly adjusting to be responsive to new and emerging risks across the globe to ensure our inspections meet the challenges of today’s global economy.
To protect investors, the PCAOB is working to enhance our inspections. Each year on average, the PCAOB inspects over 200 audit firms and reviews over 800 audits from across the globe to ensure they are following our standards. Inspections are one of the most important tools the PCAOB has to protect investors. They make sure investors can trust the information they receive. And they shine a light on problems that can lead to investigations and enforcement actions.
Modernizing Our Standards
In 2022, we announced one of the most ambitious standard-setting agendas in PCAOB history. We are working actively to update more than 30 standards within 10 standard-setting projects. We strengthened our requirements to increase accountability and improve audit quality when audit firms plan and perform audits that involve other firms or individual accountants. We issued a proposal to overhaul our standard on quality control systems at audit firms. We also proposed to replace our standard on the confirmation process, which touches nearly every audit, to strengthen and modernize our requirements.
To protect investors, the PCAOB is working to modernize our standards to meet the challenges of today’s economy. Our standards provide the requirements auditors must satisfy when conducting their audits. They also serve as the basis for our inspection and enforcement activities. Effective standards set the foundation for high quality audits.