The regulator’s parent, the Securities and Exchange Commission, is also looking more closely at companies’ financial statements. This week, the SEC approved a so-called clawback rule that requires companies to take back executives’ incentive pay if there are significant errors in financial statements. 

The SEC is also stepping up enforcement with some of its highest fines ever, underscoring the Biden administration’s tougher regulatory stance, The Wall Street Journal reported Friday.

This month, the PCAOB announced its biggest-ever fine against an individual, pledged more sweeps to root out wrongdoing by audit firms, and vowed to boot out bad actors from the profession.

The tone is sharply different from last year, when the regulator under a different leadership was dogged by accusations of being too cozy with the industry. 

Ms. Williams took over the 20-year-old regulator in January, becoming the first woman and first person of color to head the watchdog. “We’re not going to be limited to just the types of cases we’ve brought in the past or the penalties that we’ve sought in the past,” Ms. Williams said in an interview. 

The PCAOB’s data this year show that it is significantly increasing penalties, but also show how small the penalties had been. The average penalty against an individual so far this year, for example, is $44,333, more than six times the $6,996 average for 2017 through 2021, according to the regulator.

Lynn Turner, a former chief accountant at the SEC, said the very low historic level of PCAOB fines means claims of record-setting punishments are meaningless. “What is relevant to investors is whether fines are large enough to deter poor performance by auditors,” he said.

Known in the industry as peekaboo, the PCAOB was created by Congress in the wake of the accounting scandals of the early 2000s, with a mission of cleaning up the auditing profession. It oversees audits of the financial statements of more than 8,600 companies, valued at a combined $65 trillion, according to the regulator’s latest annual report. Before that, the industry largely regulated itself. 

The rules created for the regulator, some the result of lobbying by big accounting firms, constrain its actions. 

“There are limits on how much the PCAOB can dial up enforcement,” said Daniel Goelzer, a former acting chairman of the regulator. 

The PCAOB is required to coordinate its enforcement efforts with the SEC, a much bigger regulator that oversees its work. In practice, that means the SEC generally takes the juiciest enforcement actions, “tending to limit the PCAOB to smaller, less significant cases,” Mr. Goelzer said. 

A high-profile action by the SEC, which last month fined the Chinese affiliate of Big Four accounting firm Deloitte $20 million for outsourcing audit work to clients, began at the PCAOB, according to regulatory filings. The accounting firm self-reported the alleged misconduct to the PCAOB, the filings said. The PCAOB notified the SEC, which took over the investigation.

An SEC spokesman declined to comment. Deloitte didn’t respond to requests for comment. 

Some argue it makes little sense to have a separate audit regulator when the SEC also does much of that job.

Hester Peirce,

a Republican SEC commissioner, this month said the PCAOB’s $23 million annual enforcement budget could be used by the SEC to pursue serious cases, rather than chasing after relatively minor violations. Rolling up the audit watchdog within the SEC “could be more efficient,” she said in a speech.

Ms. Williams declined to comment on the SEC commissioner’s remarks, but said investors were benefiting from the work of both regulators.

It isn’t just being in the shadow of the SEC that blunts the PCAOB’s bite. The audit watchdog is also required by law to treat contested enforcement actions as confidential, unless the firms agree otherwise—which hardly ever happens. Allegations of misconduct that are disputed by firms generally come to light only if the SEC or a court upholds the PCAOB’s findings against the firm. So firms can use litigation to try to keep PCAOB claims a secret from audit committees and shareholders who might otherwise choose another auditor, officials say.

Los Angeles-based accounting firm Kabani & Co., for example, was accused by the PCAOB in 2012 of deliberately doctoring documents ahead of an inspection by the regulator to try to cover up deficiencies in its audits. The firm disputed the claims, but lost at a PCAOB hearing and again in an appeal to the SEC. The misconduct claim came to light only when the SEC got involved, years after the original PCAOB charges. 

Hamid Kabani, the founder and owner of Kabani & Co., said his firm had to reassemble the audit files because of a software problem, but there had been no intention to mislead the regulator.

Ms. Williams said in the interview she would support changing the law to make the PCAOB’s disciplinary proceedings public, in line with the way the SEC and many other regulators operate.

Any change to make the PCAOB’s disciplinary proceedings public likely faces strong industry resistance. Bills in the Senate to make this change have been the target of lobbying by the top accounting firms—Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers—federal filings show. 

“The firms prefer if the investigation and enforcement action is brought by the PCAOB. If the SEC brings the action, it’s public from day one,” Mr. Turner said. 

Representatives of EY, KPMG and PwC declined to comment. Deloitte didn’t respond to requests for comment. 

Write to Jean Eaglesham at Jean.Eaglesham@wsj.com