The term 'Public Company Accounting Oversight Board (PCAOB)' is included in the Accounting edition of the Financial Dictionary. It's available on mazon in Kindle or Paperback version. See more details here.
The Public Company Accounting Oversight Board turns out to be another regulatory group that Congress established to provide oversight on the auditing of public companies. This not for profit corporation is not a government agency. It does provide protection to the public and investors who are interested in the independent, accurate, and revealing audit reports that this group encourages. Besides this, the PCAOB oversees dealers and brokers’ audits in order to foster protection for investors. This includes oversight of compliance reports that federal security laws require from public corporations.
This accounting oversight board arose as a result of the Sabanes-Oxley Act of 2002. It mandated that the firms which audit public companies in the United States endure independent and external oversight for the first time ever. Before Congress passed this 2002 regulatory law, auditors were completely self regulating.
The PCAOB Board and chairman of this board are made up of five members who receive appointments to five year terms each from the SEC Securities and Exchange Commission. They select these individuals after consulting first with both the Secretary of the U.S. Treasury and the Federal Reserve System Chairman of the Board of Governors. Given this SEC appointing role, it is not surprising that the SEC also maintains oversight responsibilities for the PCAOB. As part of this oversight, they must approve the Board’s various standards, budget, and rules before they become final.
The SOX Act became amended by the Dodd-Frank Act. It created the necessary funding for all PCAOB pursued activities. This money mostly comes from the accounting support fees assessed annually on all publicly traded companies. These fees are actually figured from their average monthly market capitalization. Brokers and dealers are instead levied fees which are dependent on their quarterly average tentative net capital.
The mission of the PCAOB lies in providing oversight of public companies’ audits. This ensures that they prepare and deliver reliable, honest, and unbiased audit reports for the benefit of both the interested investors and members of the public. Along with this oversight role, the PCAOB monitors the broker dealers and their audits to encourage protecting investors from fraud. This includes monitoring their federal securities law required compliance reports filing.
PCAOB has a particular vision they seek to fulfill. Their overriding goal is to prove themselves a model for regulatory organizations everywhere. They seek to reduce the numbers of audit failures throughout the public securities markets in the United States, to improve the overall quality of audits, and to foster the public’s trust of auditing as a profession and the process of financial reporting itself. They aim to do this while utilizing cost efficient and cutting edged tools.
The PCAOB maintains two special advisory groups as part of its mandate. The first of these is the PCAOB Investor Advisor Group, also known by its acronym IAG. It presents advice and viewpoints to the general board pertaining to investor concerns and regarding work related matters and important policy issues. The board is able to count on the IAG to deliver it expert and quality insight and advice for carrying out its important mandate to safeguard investors as outlined in the Sarbanes-Oxley Act.
The board also relies on its Standing Advisory Group, refereed to by its acronym SAG. The SAG advises the board regarding standards of professional practice and continuing developments within the world of auditing. Among the members of the Standing Advisory Group are investors, auditors, executives of publicly traded companies, and other individuals. This SAG group holds meetings between two and three times each year. They are chaired by the Chief Auditor and Director of Professional Standards of the PCAOB.
The term 'Public Company Accounting Oversight Board (PCAOB)' is included in the Accounting edition of the Financial Dictionary. You can get your copy on mazon in Kindle or Paperback version. See more details here.