The Public Company Accounting Oversight Board
The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board (PCAOB) to assume the responsibility of overseeing the auditors of public companies. The PCAOB is a private-sector, non-profit corporation. It was established to "protect the interests of investors and further the public interests in the preparation of informative, fair, and independent audit reports". (The PCAOB) Although the PCAOB is a private sector organization, it has many government-like regulatory functions. The PCAOB was created in response to an increasing number of accounting restatements by public companies during the 1990s and a series of recent high-profile scandals like Enron and WorldCom. Prior to the PCAOB, the audit industry was self-regulated through the Public Oversight Board of the AICPA, but with the recent scandals and restatements something had to be changed.
The PCAOB consists of five members, of which one of them is the chairperson. All members are appointed by the Securities and Exchange Commission and serve a five year term. Two members of the PCAOB must be or have been a certified public accountant. However, if the chairman is one of the CPAs, they may not have been a practicing CPA for at least five years. The organization has a staff of over 500 and its headquarters is in Washington D.C. The PCAOB has been given many powers and responsibilities under section 101 of the Sarbanes-Oxley Act. They have the power to register public accounting firms that prepare audit reports for public companies. The PCAOB sets auditing, quality control, ethics, independence and other standards relating to the preparation of audit reports. They conduct inspections of registered public accounting firms. They also conduct investigations and disciplinary proceedings concerning violations of rules and impose appropriate sanctions where needed against public accounting firms. The PCAOB has the power to perform other duties or functions that are determined necessary to promote high
The PCAOB consists of five members, of which one of them is the chairperson. All members are appointed by the Securities and Exchange Commission and serve a five year term. Two members of the PCAOB must be or have been a certified public accountant. However, if the chairman is one of the CPAs, they may not have been a practicing CPA for at least five years. The organization has a staff of over 500 and its headquarters is in Washington D.C. The PCAOB has been given many powers and responsibilities under section 101 of the Sarbanes-Oxley Act. They have the power to register public accounting firms that prepare audit reports for public companies. The PCAOB sets auditing, quality control, ethics, independence and other standards relating to the preparation of audit reports. They conduct inspections of registered public accounting firms. They also conduct investigations and disciplinary proceedings concerning violations of rules and impose appropriate sanctions where needed against public accounting firms. The PCAOB has the power to perform other duties or functions that are determined necessary to promote high
References: olstrom, Gary & Ray, Thomas. PCAOB Standards-Setting Update Prepared for the Auditor 's Report (Summer 2006). Retrieved on February 7, 2007, from http://aaahq.org/audit/Pubs/Audrep/06summer/item04.htmMcDonnell, Patrick. The PCAOD and the Future of Oversight. Retrieved February 7, 2007, from http://www.aicpa.org/pubs/jofa/dec2004/mcdonn.htmThe PCAOB. Annual Report for 2005 & 2007 Annual Budget. Retrieved on February 7, 2007, from http://www.pcaobus.orgWebCPA. Online Expo Center. Retrieved on February 12, 2007 from http://www.webcpa.com/