Introduction.
The Public Company Accounting Oversight Board (PCAOB) is a governmental nonprofit making corporation which was established by the Congress, in the Sarbanes- Oxley Act of 2002, to steer and oversee the public companies’ audits with the sole aim of protecting the interests of investors and the general public by ensuring that the preparation of accurate, informative and independent audit reports. PCAOB is further mandated to look into the audit of broker dealers and put checks on their activities so as to protect the investors against any kind of potential exploitation.
Being a national corporation, the PCAOB operates in the best interest of the country to ensure that the true and fair view is always upheld in all public companies operating within the country, either native of foreign companies. The board also acts as a controller for the registration and deregistration of firms in the country: all accounting firms must register with the PCAOB for them to be allowed to conduct audits for issuers, brokers and dealers. The foreign accounting firms are also subject to scrutiny and registration by this board if they are to offer their services the in the country. The board is the regulator of all accounting activities among all public companies and any accounting firm which wishes to operate in the country must satisfy the conditions and act according to the rules of the board.
The board is the custodian to the register of the registered firms and also those which have withdrawn from the board. It Is mandated to keep an eye on the operations of the national audit agents including the private accounting firms. The registered firms pay a fee to the board for the services and sustenance of the board.
It also inspects all the registered public accounting firms to assess and evaluate their level of compliance with rules such as those of the PCAOB, securities exchange commission, and professional ethics as pertains the conduct of audits, issuance of audit reports, and other matters that may influence the capital market operations such as those among brokers, dealers, companies and issuers.
After every inspection, the PCAOB prepares a written report and submits it to the securities exchange commission and other state regulatory authorities. Some information that may be deemed important to the general public is made available to them with special restrictions as outlined in the Act.
The board outlines and safeguards the accepted standards for a healthy audit environment. The standards can be outlined as follows:
- Auditing and interim standards: The board outlines the accepted standards for the conduct of any audit and interim audit activity. Such standards as adopted by the PCAOB and approved by the securities and exchange committee guide the daily operations within the investment arena. The standards include AS No 1-16, and are meant to guide audit issues such as audit documentation, Audit risk, Audit evidence, Audit planning among others. The guidelines and interim standards of the board are in line with those provided by the AICPA.
- Ethics and independence: The board is guided by rules and interim standards which have been approved by the securities exchange committee. The guidelines and principles give the board the power to operate independently without undue influence from any party, and issue independent reports.
- Quality control: The board seeks to attain the highest level of quality for the audit reports it issues and any other engagement as need may dictate.
Empowerment of the PCAOB.
The board is empowered by the Act to investigate and discipline any registered firms found to be acting an contravention to the Sarbanes-Oxley act, the securities and exchange commission, the guidelines of PCAOB and any other professional standards which dictate the code of conducting audits for companies, brokers and dealers. The hearings conducted by the PCAOB are confidential and only involve the victim and the board unless otherwise decided by the board.
Conclusion
The PCAOB serves in the full capacity of a moderator and a watchdog for the national audit and accounting practices for private and local firms. The board derives all its powers from the Sarbanes-Oxley Act of 2002 and works in conjunction with other regulatory authorities within the country and internationally to achieve its objectives fully.
References
http/w.w.w.Pcaobus.org/About/Pages/default.aspx
