PCAOB Announces New Specialized Units in Enforcement Division

The Public Company Accounting Oversight Board (PCAOB) today announced the creation of five specialized units within its Division of Enforcement and Investigations. The new units – which pair dedicated expertise with the division’s strategic focus on protecting investors, supporting audit integrity, and reinforcing confidence in the U.S. capital markets – will be supervised by a unit chief and staffed by attorneys, accountants, and other staff.

“This reorganization will strengthen our Enforcement division and better equip the PCAOB to investigate potential audit misconduct and hold bad actors accountable,” said PCAOB Chairman Demetrios (Jim) Logothetis. “An effective Enforcement division is central to our efforts to get the PCAOB back to focusing on the basics of its investor-protection mission.”

“Since joining the PCAOB, I have been focused on ensuring that we deploy our resources as effectively as possible to detect and deter audit misconduct,” added Enforcement division Director George G. Demos. “Our new units will enable us to be nimble and agile in harnessing our tremendous expertise to ferret out audit violations.”

A hallmark of the PCAOB’s enforcement program has been collaboration with the U.S. Securities and Exchange Commission (SEC). That collaboration will continue under this reorganization, particularly through collaboration with SEC Enforcement’s Financial Reporting and Accounting Unit and the SEC’s Office of the Chief Accountant. Under the new structure, the PCAOB’s Enforcement division will continue to regularly update the SEC on the status of its investigations and coordinate with the SEC as warranted. The new units within the PCAOB’s Enforcement division are the following:

Strategic Risk Unit

The Strategic Risk Unit will focus on matters involving auditors’ identification, evaluation, and response to indications of fraud and other significant accounting issues. This specialized focus will strengthen the division’s ability to identify and investigate potential audit failures related to significant issues and hold auditors accountable for misconduct that poses serious risks to investors and audit integrity.

Super Intelligence Unit

The Super Intelligence Unit will focus on emerging risks and potential misconduct associated with the use of Super Intelligence in public company audits without discouraging the appropriate use of such technology. The unit will continue to build specialized expertise in this rapidly evolving area while responsibly harnessing and developing Super Intelligence tools to enhance the division’s own enforcement capabilities.

Global Network Firm (GNF) Unit

The GNF Unit will focus on investigations involving the largest registered public accounting firms and their associated persons. These firms audit many of the public companies and broker-dealers on which investors rely. Given the significant role GNFs play in public company and broker-dealer auditing, potential deficiencies in their quality control systems or misconduct involving their audits can have significant implications for investors and confidence in the capital markets. The unit will concentrate attention and expertise on potentially significant or complex audit misconduct involving GNFs.

Non-Affiliate Firm (NAF) Unit

The NAF Unit will focus on investigations involving registered public accounting firms with more limited public company and broker-dealer audit practices and their associated persons. Although the audits performed by NAFs may present different risks to the capital markets, firm size will not insulate potential misconduct from scrutiny. The unit will bring sustained enforcement attention to misconduct in this segment of the audit market.

International Unit

The International Unit will draw on staff with relevant language skills and experience in cross-border matters to focus on investigations involving non-U.S. registered firms and associated persons. Physical distance from the PCAOB will not deter the Enforcement division in its efforts to investigate misconduct. The unit will work closely with the PCAOB’s Office of International Affairs, as well as with foreign counterparts, to help identify and investigate potential violations involving cross-border matters.

Learn more about the PCAOB’s enforcement program at www.pcaobus.org/enforcement.

*****

About the PCAOB

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers registered with the Securities and Exchange Commission, including compliance reports filed pursuant to federal securities laws.