From the course: Accounting Foundations: Internal Controls
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Public Company Accounting Oversight Board (PCAOB)
From the course: Accounting Foundations: Internal Controls
Public Company Accounting Oversight Board (PCAOB)
- The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board, the PCAOB. People who say this a lot usually just leave the A silent, so it sounds like they're saying PCOB. In the wake of the accounting scandals such as Enron and WorldCom, there was big concern about whether external audits were reliable. So Sarbanes-Oxley created the PCAOB, which can be thought of as an auditor watchdog agency. Technically, the PCAOB is a private, nongovernmental group. However, it is supervised by the SEC, which is a government agency. For example, the PCAOB members are appointed by the SEC and the SEC approves the formal actions taken by the PCAOB. Okay, but what does the PCAOB do? Well, for starters, the PCAOB registers all public accounting firms that provide audits for public companies. Think of this as a certification or license necessary to conduct an external audit in the United States. The PCAOB also sets…
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