Example Of Report On The Public Company Accounting Oversight Board

The public company accounting oversight board (PCAOB) is a non-profit making corporation. The Sarbanes-Oxley Act led to the creation of the board in 2002. The aim of the formation of the board was to provide guidelines on how auditing of public companies should be carried out. Its purpose was to protect the shareholders and investor’s interest. Public companies practice stewardship accounting. In stewardship accounting, the shareholders provide resources to an organization. The management of the public company should invest in projects that are going to maximize on shareholders’ wealth. Shareholder’s wealth is the product of the number of shares and the market price of the shares in the capital market.
Auditors should follow the auditing standards and guidelines set by the public oversight accounting board. Auditing is an independent practice. It involves an examination of financial statements of a public company. The financial statements should be prepared as per the accepted accounting and auditing principles. The financial statements prepared include the statement of financial position, Income statement, cash flows statements and statement of changes in equity. Auditing process should be carried out in accordance to the set rules and regulations.
The board aims to ensure that auditors show a high degree of discipline in the auditing process. An auditor should minimize incidences of conflict of interest in carrying out an audit. They should not accept appointment where they suspect that their work may be compromised as a result of conflict of interest. Failure to maintain discipline may lead to cancellation of the practicing certificate by the public oversight accounting board. Accounting and auditing firms should also be formed using the correct procedure. The partners should have the necessary qualifications to carry out auditing and accounting services. The board helps to register public accounting and auditing firms which prepare audit reports for the shareholders. It is the duty of the board to ensure that the firms have qualified and competent staff. Also, they ensure that the accounting firms have enough resources to carry out their duties. This minimizes the incidences of over-relying on the client. This may lead to conflict of interest.
Public company accounting oversight board helps to set the auditing and accounting guidelines to be used by auditors. The board sets accounting and auditing ethics which govern the auditing process. Ethics may include maintaining confidentiality and being independent during the auditing process. The board also provides guidelines for the preparation of financial statements by the public companies.
The board has to issue inspection reports after they have conducted audits of public accounting firms. The board should inspect the public accounting firms. This ensures that the accounting firms are following the accounting and auditing standards set by the board. The staff should have the necessary qualifications. Inspection reports should be published. It is not necessary to create awareness to the public, on information regarding defects in the control system. The information may be made public if the firm does not rectify the control system within the next twelve months. The board determines the amount of the annual fee that each accounting firm should pay. The accounting support fee is for supporting the operations of the board. It is the duty of the public oversight accounting board to set the amount to be paid. The board allocates evenly the amount to be contributed by each accounting firm.