The U.S Securities and Exchange Commission refers to the United States’ agency that is tasked to enforce the securities laws, policies and guidelines, including the country’s stock and options exchange activities. It is the objective of this agency to “ protect investors, maintain fair, orderly and efficient markets, and facilitate capital formation” (U.S, 2017). One of the main roles of the SEC is to ensure that investors who turn into the securities exchange market are protected and activities that are geared towards capital and investment formation are sustained for economic growth.
The Creation of the PCAOB
The Public Company Accounting Oversight Board (PCAOB) was formed by the Sarbanes-Oxley Act of 2002, and its major tasked is to watch over how accounting professionals and firms conduct their independent audit reports. For example, the PCAOB provided standards in relation to audit documentation where it was expressed that the auditor should retain the working papers and other forms of audit documentation (Delaney and Whittington, 2012). Consequently, the creation of the PCAOB was coupled with a Congress directive for the SEC to look after the organizations overall PCAOB operation.
Some of the other specific tasks of the PCAOB is to ensure the registration of public accounting firms, establish audit quality control standards, conduct inspections of accounting firms as well as enforce their compliance with the Sarbanes-Oxley Act. In line with these, the SEC has the responsibility to issue orders and other orders in relation to PCAOB’s duties. For instance, the Securities and Exchange Commission has the authority to look into PCAOB’s operation such as those that involved the appointment and removal of its members, as well as approve the organization’s budget.
The Sarbanes-Oxley Law
In Securities and Exchange Commission was created after the economic crisis that occurred in the United States during the 1930s. The SEC was designed to regulate the activities of the securities industry; however, the changing economic times necessitates the creation of further laws to govern the current needs of the securities market. This resulted in the creation of the Sarbanes-Oxley Act, which was signed into law in order “to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes” (qtd in Strohm, 2007). The Sarbanes-Oxley Act was intended to reinforce the initial position of the Securities and Exchange Commission in relation to the needed regulatory measures against possible accounting failures and financial scams within the securities exchange market.
Dodd-Frank Act
The Dodd-Frank Act refers to a federal law that was signed recently as a response to the economic crisis. The role of the SEC in relation to this law was contained in several sections of the Dodd-Frank ACT, and most of which relates to the requirement for SEC to look after the implementation of rules concerning the issue. This is specifically so in the SEC’s duty to enforce the better transparency and investor protection laws as a means to develop a more resilient marketplace and build a better future for the people of the United States. In line with this duty, the Dodd-Frank Act was put into law to implement the needed changes and oversight in the country’s financial institutions. For example, this law enforces the guidelines towards the early identification of risks concerning financial stability among diverse financial companies. This relates to the SEC’s objective to readily respond to possible threats that can occur in the financial and securities exchange market.
References
Delaney, P., & Whittington, R. (2012). Wiley CPA examination review, outlines and study guides. Retrived from https://books.google.com.ph/books?id=d_8YTTddBi4C&dq=The+company+accounting+oversight+board.google&source=gbs_navlinks_s.
Strohm, C. (2007). United States and European Union Auditor Independence Regulation: Implications for regulators and auditing practice. Springer Science and Business Media.
U.S. Securities and Exchange Commission. (2017). What we do. Retrieved from https://www.sec.gov/about.shtml
