Public Company Accounting Oversight Board; Will It Protect Investors?

In this court case in which the Petitioner accounting firm which was a non profit organization wanted to sue the PCAOB because they believe that the President had not control over the members of the board and threaten the separation of power law. The Sarbanes-Oxley Act, also known as SOX was to put in place to protect investors from fraud in accounting activities in corporations. The courts ruled that the separation of powers was not broken because The President of the United States can remove member of the SEC, which the SEC controls the PCAOB.

The PCAOB is responsible for providing independent oversight for public accounting firms. Auditors independence job is to limit conflict of interest and monitor the requirements of new auditor approvals. Corporate responsibility require that senior executives take sole responsibility for completeness and accuracy of all corporate financial reports. Last but not least, enhance financial disclosures assures the accuracy of financial reports and

3 – Public Company Accounting Oversight Board (PCAOB) (source: PYP7-6 Kimmel textbook.) The PCAOB was created as a result of the Sarbanes-Oxley Act. It has oversight and enforcement responsibilities over CPA firms in the United States.

In general, the main criticisms of the PCAOB are that it has not made sufficient it’s regulatory power, it is slow to act in its investigations of enforcement cases, and that it targets enforcement on smaller firms in order to protect the Big 4 firms, which are regarded as “too big to fail.” While I do not disagree with the fact that the PCAOB is slow and has not produced a significant amount of regulation, I do disagree with the criticism of the PCAOB as a regulatory body in general. I feel that certain members of the public desire absolute transparency in financial reporting, but do not understand the economy required to so. It is nearly impossible, not to mention impractical, to breakdown every aspect of a multi-billion dollar corporation to ensure that every transaction is accounted for

In general, the main criticisms of the PCAOB are that it has not made sufficient it’s regulatory power, it is slow to act in its investigations of enforcement cases, and that it targets enforcement on smaller firms in order to protect the Big 4 firms, which are regarded as “too big to fail.” While I do not

In the year 2002, the US reached a land mark decision when the Sarbanes Oxley act was finally affected into law which principally changed the way auditing and financial reporting was being conducted. This act was prompted by high level frauds that public companies engaged in with regard to financial reporting and auditing practices. The act therefore recommended the setting up of a Public accounting Oversight board which was mainly to conduct regulatory and supervisory roles in auditing public audit firms and individual auditors. This was done through establishment of proper quality control measures on the work of auditors to minimize the audit risks that firms could face while conducting their work. The Ligand Pharmaceuticals case

Another outcome of the law is, Public Company Accounting Oversight Board (PCAOB), a public agency was created .This agency act as auditors of the public company .Their area of work is overseeing, regulating and inspecting accounting firms. The act also deals with issues such as auditor independence, internal control assessment, corporate governance and enhanced financial disclosure. The non-profit arm of Financial Executives International, Financial Executive Research Foundation completed a thorough research studies to help support in the foundation of the

According to the Public Company Accounting Oversight Board (PCAOB), The primary objective and responsibilities of auditor is to express an opinion on the fairness with which all financial statement including all of its (material aspects, financial position, the result of the company operation and its overall level of cash flows) AU Suction 110. Thus, what this means is that auditor must be fully independent and must be fully able and willing to apply professional judgment as it relates to the audit engagement under consideration.

“Sarbanes-Oxley Act of 2002” mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the "Public Company Accounting Oversight Board," also known as the PCAOB, to oversee the activities of the auditing profession” (U.S. Securities and Exchange Comissions).

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

The Sarbanes-Oxley Act (SOX) was enacted in July 30, 2002, by Congress to protect shareholders and the general public from fraudulent corporate practices and accounting errors and to maintain auditor independence.   In protecting the shareholders and the general public the SOX Act is intended to improve the transparency of the financial reporting.   Financial reports are to be certified by the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) creating increased responsibility and independence with auditing by independent audit firms. In discussing the SOX Act, we will focus on how this act affects the CEOs; CFOs; outside independent audit firms; the advantages and a

To start, the agency assigned to oversee the implementation of the Sarbanes-Oxley Act is the Securities and Exchanged Commission (SEC). It created the Public Company Accounting Oversight Board (PCAOB) to monitor and evaluate auditing reports from accounting firms to ensure the quality of financial statements and that full corporate governance is being carried out. It sets a standard that all firms must follow closely. PCAOB is an independent organization whose primary role is to catch and recognize any suspicious and unethical activities in accounting firms and oversee that firms are following the compliances rules of SOX. A typical auditing report created by PCAOB is divided into two parts. According the Nagy (2014), the first part consists of a list of any flaws in compliance and auditing errors and the second part is quality control. The purpose of creating PCAOB is to promise investors and the general public that firms are following the strict compliance policy of SOX and that the SEC is aware of the financial situation of companies because it is keeping a close eye on monitoring business

In addition, the PCAOB was given broad responsibilities, including enforcing the Sarbanes-Oxley Act, the SEC’s rules, the professional accounting standards, the securities laws, and its own rules. The Sarbanes-Oxley Act, among other things, created the PCAOB. Furthermore, to reaffirm the public's confidence in the nation's financial markets and to establish a more uniform system of corporate accountability and disclosure, the Sarbanes-Oxley's goals was to implement a series of controls and safeguards on public companies. Moreover, the Sarbanes-Oxley Act selected the Securities and Exchange Commission to oversee the PCAOB. Further, the Sarbanes-Oxley Act states that the PCAOB’s budget and accounting support fee be subject to approval by the SEC being that they are the ones who fund the operations of

INTRODUCTION There has been considerable interest in recent years in the role of the audit committee as a key corporate governance mechanism. Corporate governance committees and regulators around the world have addressed the need for effective audit committees, with many requiring that listed companies must have a committee (European Union (EU) 8th Company Law Directive, 2006; Smith Report, 2003; United States (US) Congress, 2002). Recognising that the existence of a committee does not guarantee that the committee will be effective, attention has moved to the composition and activities of audit committees. Recommendations have focused on the independence and expertise of committee members and the frequency of committee

People often question whether corporate boards matter because their day-today impact is difficult to observe. But, when things go wrong, they can become the center of attention. Certainly this was true of the Enron, Worldcom, and Parmalat scandals. The directors of Enron and Worldcom, in particular, were held liable for the fraud that occurred: Enron directors had to pay $168 million to investor plaintiffs, of which $13 million was out of pocket (not covered by insurance); and Worldcom directors had to pay $36 million, of which $18 million was out of pocket. As a consequence of these scandals and ongoing concerns about corporate governance, boards have been at the center of the policy