Public Company Accounting Oversight Board - Definition
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Public Company Accounting Oversight Board (PCAOB) Definition
The Public Company Accounting Oversight Board (PCAOB), is an auditing board that oversees the audits of public companies, broker-dealers and other companies. This is a private but non-profit establishment that periodically regulates audit experts of public traded companies. PCAOB protects the rights of investors by minimizing audit risks during auditing of companies and other corporate entities.
A Little More on What is the Public Company Accounting Oversight Board
PCAOB is an independent organization which is not regulated by the government. This board controls and monitors auditors of publicly traded companies with the aim of reducing audit risk which will in turn offer investment security to the investors. In the 1990s, many auditing and accounting scandals were recorded and this brought about the passage of PCAOB as an approach to minimise the risks attributed to auditing. The Public Company Accounting Oversight Board was created by the Sarbanes-Oxley Act of 2002 with the aim of protecting investors and regulating auditors of publicly traded companies. PCAOB sees to it that auditors adhere to a set of guidelines vital for the task. Only brokers, dealers and public company auditors that are registered with PCAOB are regulated or inspected by the Board. Sanctions can also be meted to erring auditors, in 2016, the board settled about 54 disciplinary orders and imposed a fine $8 million. As included in the Sarbanes-Oxley Act of 2002, professionals that audit U.S companies are regulated by PCAOB and sanctions are meted out accordingly. The board members of PCAOB are independently appointed by the U.S. Securities and Exchange Commission (SEC), the members are entitled to a five-year tenure. SEC is an agency of the United States which has the responsibility of supervising exchange industries, even audit firms. The board members of PCAOB are five in number and two of them must be Certified Public Accountants. The major responsibilities of PCAOB include registration of public accounting firm, inspecting and investigating the firms, meting out discipline on erring firms and establishing quality control auditing. Presently, PCAOB has four board members because one of the seats is vacant. The members execute their duties with a staff of over 800 people from major departments. The mission of PCAOB is to oversee public accounting firm or audits of companies with the aim of protecting investors. Public companies and SEC-registered dealers and brokers are regulated by PCAOB through constant monitoring, provision of auditing quality control and ethics that will protect public interest. PCAOB releases regular audit reports that are accurate and informative. PCAOBs vision is to be a mother to public accounting firms, this will present PCAOB as a reliable organization that sets auditing standards for auditors of publicly traded companies. The vision is to improve the quality of auditing, enhance integrity and professionalism of auditors and provide security for investors through effectiveness and accountability of auditors. There are some core values that PCAOB hold at high esteem. There are five core values of PCAOB, these core values are; integrity, excellence, accountability. Collaboration and effectiveness. Adherence to ethical and professional conduct is vital to PCAOB, her professionals also strive for excellence both in internal and external dealings. Furthermore, PCAOB manages resources efficiently and effective and also ensure the effectiveness of policies that are implemented. Diverse skill sets and perspectives are also enhance by PCAOB, with collaboration, the effectiveness of policies and practices is achieved. In additions, PCAOB ensures that auditors of public accounting firms are accountable and this gives excellent output. There are certain responsibilities that are expected of PCAOB, these responsibilities are listed below;
- Registration of auditors of public firms, public accounting firms and SEC-registered brokers or dealers.
- Ensuring that registered public accounting firms, SEC-registered brokers and dealers comply to the 2002 Sarbanes-Oxley Act.
- Establishing modes or standards of operation for the registered firms such as quality control auditing and their ethics.
- Monitoring and regulating the registered firms through regular inspections and investigations.
- Imposing penalties on erring members.
References for the PCAOB
Academic Research on the Public Company Accounting Oversight Board (PCAOB)
Some Thoughts on an Agenda for the Public Company Accounting Oversight Board, Weiss, E. J. (2003). Duke LJ, 53, 491. After many years of the establishment of PCAOB, certain thoughts have arisen on conduct and duties of PCAOB and how it can continue to function effectively in an ever-changing environment. This paper presents an overview of popularly-held thoughts on agenda for the Public Company Accounting Oversight Board. The thoughts examined in this paper are holistic as they include the creation strategic plans and transformational initiatives to enhance a better and more efficient PCAOB. The roles of data and technology are also not excluded in this transformational agenda. Massive, unchecked power by design: The unconstitutional exercise of executive authority by the Public Company Accounting Oversight Board, Carvin, M. A., Francisco, N. J., & Vergonis, C. G. (2007). NYUJL & Bus., 4, 199. This is a study carried out on the excesses of the Public Company Accounting Oversight Board in terms of exercising their power and executive authority. There are different arguments against the massive and unchecked power design of PCAOB as well as the unconstitutional exercise of authority by its board members. The board is regarded as an unconstitutional violation of separation of power principles. This paper studies the massive and unchecked power of the PCAOB design. The public company accounting oversight board: National and international implications, Bather, A., & Burnaby, P. (2006). Managerial Auditing Journal, 21(6), 657-669. This paper is an extract from managerial auditing journal that investigates the implications of the Public Company Accounting Oversight Board, both at the national and international levels. The investigation alco includes looking into issues and unanswered questions that are related to PCAOB. There have been pending questions on the national and international implications of PCAOB, this paper investigates these long-standing issues and questions. Is the public company accounting oversight board constitutional, Birg, E. C. (2005). The Federalist Society for Law and Public Policy Studies, 2(15), 2005. This paper examines the constitutionality of the Public Company Accounting Oversight Board. PCAOB as a private-sector is saddled with the responsibility of registering, monitoring, inspecting and generally overseeing audits of public companies, issuers, SEC-registered brokers and dealers. Being a non-profit organization established in 2002 by the SarbanesOxley Act, this paper aims to examine whether PCAOB is constitutional or not. Free Enterprise Fund v. Public Company Accounting Oversight Board, Strauss, P. L. (2009). Some arguments exist that question the unchecked and massive power of PCAOB, as well as the unconstitutional exercise of executive authority by board members. This paper however, examines the position of the law as regards Free Enterprise Fund and Public Company Accounting Oversight Board.This paper presents the stance of the constitution on Free Enterprise Fund and Public Company Accounting Oversight Board, as well as areas where. Violation of separation of power under the constitution ensue. Perspectives on the Public Company Accounting Oversight Board (PCAOB) 20042005, Bailey Jr, A. D. (2014). Accounting Horizons, 28(4), 889-899. This paper presents a commentary on different perspectives of the public company accounting oversight board between 2004-2005. These perspectives are derived from academic fellows of the U.S. Securities and Exchange Commission (SEC) during their academic years between 2004 and 2005. The commentary include discussions on staff relations between PCAOB and SEC, PCAOB's approach to review the interim audit standards, audit documentation, audit standards among many others. Comments are also made as regards the performance and competence of PCAOB staff and board members. Seven years of the Public Company Accounting Oversight BoardWhat has been accomplished and what remains to be done, Goelzer, D. (2009, December). In Speech before the AICPA conference, Washington, DC. This paper is an analysis of the performance of the Public Company Accounting Oversight Board in seven years and what the board has been able to achieve. The study also puts in consideration cogent things that are yet to be done by PCAOB and strategic measures that can be devised to accomplish the remaining tasks. This study therefore presents a performance analysis of PCAOB in seven years and insights that will help the board accomplish great feats. The Unaccountability of the Accounting Regulators: Analyzing the Constitutionality of the Public Company Accounting Oversight Board, Innes, W. (2008). J. Marshall L. Rev., 42, 1019. The unaccountability of accounting regulators is a subject matter that people do not easily overlook, not only because unaccountability in auditing or accounting profession is a breach of public trust but also because it renders the values of the auditing regulators pointless. This paper through an analysis of the constitutionality of the Public Company Accounting Oversight Board, examines the unaccountability of the accounting regulators and how this defect can be corrected. Free Enterprise Fund v. Public Company Accounting Oversight Board: The Decision that Corporate America May Forever be Waiting For, Eckhardt, C. N. (2009). N. Ky. L. Rev., 36, 143. With regard to the effectiveness and overzealous regulations of PCAOB which have resulted in the delivery of an accountable and quality control auditing, this paper evaluates what PCAOB means for the United States on America. It examines how the Free Enterprise Fund and Public Company Accounting Oversight Board can be the decision that corporate America is yearning for. Role and Function of the Public Company Accounting Oversight Board and Auditing Standard No. 5 an Audit Internal Control Over Financial Reporting that Integrated , Farrar, F. (2010). This study is carried out to examine whether the PCAOB is a constitutional entity or not and how its set standards, policies and strategies led to the creation of Auditing Standard No. 5 (AS 5). This paper studies the duties and functions of PCAOB and its effect in the auditing sphere. Auditing Standard No. 5 (AS 5) refers to an internal control over financial reporting which is integrated with an audit of financial statements. This paper examines how the intense devotion of PCAOB resulted in the creation of AS 5. The Auditor for the Auditors' Auditor: Accounting for the Unitary Executive in Free Enterprise Fund v. Public Company Accounting Oversight Board, Stapler, K. E. (2010). Pepp. L. Rev., 38, 709. Although, the subject of discussion in the paper might seem complex, a deep look at the discussion will prove it worthy. This paper examines who audits for the auditors auditor, or simply put, who is the auditor of an auditor. This paper is a study on how a unitary executive is audited in Free Enterprise Fund and Public Company Accounting Oversight Board. The unitary is a theory in the American constitutional law, this theory posits that the President has the absolute power to control an entire executive branch. This means that the president has the executive power, this paper however investigates who audits the unitary executive.