US SEC reportedly establishes new accounting enforcement division

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According to recruitment information and a knowledgeable source, the U.S. Securities and Exchange Commission (SEC) is forming a new accounting enforcement division while reducing staff at an external oversight agency. This external oversight agency was established in the early 2000s after the Enron scandal to regulate the accounting industry.

These measures indicate that the SEC is attempting to take over some functions typically handled by the Public Company Accounting Oversight Board (PCAOB), which has fallen out of favor since the Trump administration took office.

The SEC has posted recruitment notices online for a newly formed team responsible for overseeing violations related to the 2002 Sarbanes-Oxley Act. This legislation was enacted to address a series of accounting scandals and audit failures that ultimately led to the bankruptcies of Enron and WorldCom.

One of the SEC’s job postings states that this new “SOX” team will “investigate and prosecute cases that may violate auditing and related professional standards, the Sarbanes-Oxley Act, and other relevant federal securities laws.”

The SEC works jointly with the PCAOB on such matters. The PCAOB is a non-profit organization established under the same law in 2002. Under the long-standing Republican leadership, which has been critical of the PCAOB, concerns about its future have grown.

The SEC is responsible for overseeing the PCAOB, but under Chairman Paul Atkins, the agency has significantly cut the PCAOB’s budget. While Atkins acknowledged the importance of the PCAOB’s core functions, he stated that the organization is a heavy burden on free enterprise and has publicly discussed the possibility of SEC taking over PCAOB’s responsibilities.