Notes

What a settled order means

Many firm sanctions are agreed rather than decided after a contested hearing. A settlement records the regulator's findings and the agreed sanction. Whether the firm admits the findings depends on the regulator and the case.

• The PCAOB posts all settled orders it reaches with registered firms or their associated persons, as well as final Board actions in litigated cases.¹
• In its 2024 order against KPMG Netherlands, the PCAOB said the firm neither admitted nor denied the findings and consented to the order.²
• Settlements can include admissions. The SEC said in 2022 that Ernst & Young admitted the facts underlying the SEC's charges in its exam cheating case.³
• Under the FRC Audit Enforcement Procedure, settlement can be agreed at any time after a Notice of Investigation and before a Tribunal decides. Agreed notices are subject to approval by an Independent Reviewer.⁴
• If an FRC case is neither concluded at investigation nor settled, it goes to a Tribunal, which hears evidence and decides whether to make an Adverse Finding and impose sanctions.⁴

Sources

1. Public Company Accounting Oversight Board, Enforcement
2. Public Company Accounting Oversight Board, PCAOB Imposes Record $25 Million Fine on KPMG Netherlands and Bars a Firm Leader After Exam Cheating, Misinforming Investigators (10 April 2024)
3. U.S. Securities and Exchange Commission, Ernst & Young to Pay $100 Million Penalty (press release 2022-114) (28 June 2022)
4. Financial Reporting Council, Audit Enforcement Procedure