SEC Sanctions Against Auditors: Recent Trends and Some Lessons for the Future

Securities and Exchange Commission orders involving auditors—that is, auditor matters that the Division of Enforcement decides to pursue to settlement or judgment—almost always involve a suspension or bar. Most of these “time outs” are for periods of longer than two years. These are the conclusions from our review of recent SEC orders. In that review, we tallied the sanctions imposed by the orders, and we also looked for guidance about factors that could help predict the level of sanctions in future matters. Our review did not generate specific guidance about how to predict sanctions in any particular case, but it did provide a sense of the nature of the audit failures that tend to lead to stiffer sanctions.