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According to this Cornerstone Research report, SEC accounting and auditing enforcement actions were up 22% in fiscal 2023 (compared to an 8% increase in enforcement overall). Over the years, we’ve noted that the SEC’s enforcement activities tend to reach a crescendo as the end of its fiscal year approaches, and the report sure bears that out.  Specifically, the report says:

More than half of all actions initiated in FY 2023 (44) were brought in the fourth quarter of the SEC’s fiscal year. The SEC initiated 28% of all actions in FY 2023 in September alone.

The data also supports another trend we’ve discussed — the focus on allegedly deficient internal controls or disclosure controls.

In FY 2023, 56% of actions alleged violations of internal accounting controls, up from 41% in FY 2021 and above the FY 2018-FY 2022 average of 47%. In FY 2023, 21 actions alleged violations of both internal accounting controls and disclosure controls and procedures, the highest level in recent years.

– John Jenkins