Public Company Accounting Oversight Board Flashcards, test questions and answers
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What is Public Company Accounting Oversight Board?
The Public Company Accounting Oversight Board (PCAOB) is an independent, non-profit organization that oversees the audits of public companies in the United States. Established by the Sarbanes-Oxley Act of 2002, it is funded by fees charged to public companies and securities brokers and dealers.The PCAOB ensures independent auditors for public companies are subject to regular oversight. This includes conducting inspections of registered accounting firms that conduct audits for public companies, registering auditors who audit public companies, setting standards for audits conducted by registered firms and enforcing compliance with those standards. The PCAOB also has the authority to investigate potential violations of federal securities laws related to auditor independence and disciplinary proceedings against registered firms or associated individuals. In order to maintain effective oversight, the PCAOB works closely with other regulators such as the Securities and Exchange Commission (SEC). This includes participating in joint inspections of audit firms and disseminating information on best practices in financial reporting. Additionally, they are required to provide annual reports on their activities which are made available publicly. In conclusion, the PCAOB plays a key role in protecting investors’ interests by maintaining strong oversight over auditors who serve public companies. This helps promote trustworthiness in financial reporting through improved accountability so investors can make informed decisions when investing their money in these entities.